Taiwan’s Economic Growth in Q2 2023

By Jeanny Kao and Faith Hung

TAIPEI (Reuters) – Taiwan’s trade-dependent economy grew more than expected in the second quarter thanks to stronger demand for new technology, such as artificial intelligence (AI).

Taiwan is a key hub in the global technology supply chain for companies such as Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), and home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Gross domestic product (GDP) grew by a preliminary 5.09% in the April-June period from a year earlier, which surpassed the 4.8% growth forecast by analysts in a Reuters poll, albeit slower than the 6.56% expansion in the first quarter.

“All indexes monitoring investments were better in Q2 than Q1…there’s been a notably significant rise in demand for machinery equipment,” stated Tsui-hua Wang from the Directorate-General of Budget, Accounting and Statistics.

Some analysts remain optimistic about full-year predictions. “Q2 GDP exceeds market forecasts. Analysts have raised full-year forecasts to 3.5% – 4%, or even above 4%, due to solid performance of exports and investments recently,” said Jeng-yu Liu of First Capital Management.

Analysts see limited chances for Taiwan’s central bank to increase interest rates at its next quarterly rate-setting meeting in September.

Quarter-on-quarter, the economy grew at a seasonally adjusted annualised rate of 0.13%.

Shipments from the technology sector, boosted by global demand for AI-related products, will likely assist in maintaining economic momentum.

Second-quarter exports rose 9.9% compared to the same period in 2023, contrasting with the first quarter’s annual growth of 12.9%.

The economy in China, Taiwan’s largest export market, grew much more slowly than anticipated in the second quarter, expanding 4.7%, which marked its slowest pace since the first quarter of 2023, falling short of the 5.1% analyst forecast in a Reuters poll.