TAIWAN

30 April 2013

Economic Highlights

Liang Siew Huay +65 6232 3851 siewhuay.liang@sg.oskgroup.com

GDP Growth Eased to 1.54% yoy in 1q

Taiwans real GDP growth slowed to 1.54% yoy in 1q13 based on preliminary estimates, down from 3.72% in 4q and compared with +0.73% in 3q. This was lower than the consensus estimation of +3.10% and government forecast of +3.26% yoy. On a seasonally adjusted basis, the economy contracted by 0.81% qoq or an annualized rate of -3.21% in 1q, compared with +1.78% qoq and +7.30% in 4q12 respectively, indicating decelerating activity in the economy amid a weak external economic environment. The growth moderation was mainly due to a considerable slowdown in domestic private final consumption and weakerthan-expected growth in the exports of goods and services which were partially offset by solid expansion in investment activity. Growth in the private consumption, which accounted for 53.7% of GDP in 2012, eased to 0.35% yoy in the 1q from +1.55% in 4q12 as consumer sentiment turned cautious given a stagnation in real wage growth and a tapering off in stock market activity in the first quarter. Although real exports of goods and services rose at a faster pace of 4.84% yoy in 1q compared with +3.95% in 4q12, imports increased by a higher rate of 6.92% yoy in 1q after rising 2.15% in the 4q. According to the government, first-quarter exports were partly affected by supply chain problems in the information and communication industry, a slower Chinese economy, weaker Japanese yen and the continued sluggish European economy. Meanwhile, investment continued to pick up, rising 10.64% yoy in the 1q after a rebound to 8.97% in 4q12. The higher investment was driven in part by a further expansion of capital expenditure by the semiconductor industry, as well as investment in aircraft, rail and other transportation equipment. Overall, private consumption contributed 0.20 ppt to GDP growth in 1q, down from +0.81 ppt in 4q12. Investment contributed another 1.65 ppt (vs. +1.33 ppt in 4q) while government spending subtracted 0.05 ppt from the growth rate (vs. -0.21 ppt in 4q). Net exports dragged growth by 0.26 ppt, compared with a positive contribution of 1.78 ppt in 4q. On the production side, the main support came from real estate sector, which grew 4.29% yoy in 1q compared with +2.75% in 4q12. By contrast, the manufacturing sector slowed to 1.61% yoy, after expanding at a stronger pace of 5.57% in 4q, as destocking in some industries slowed down industrial production in the quarter. Growth in the construction, transportation & storage, and accommodation & food services sectors also grew at a slightly faster pace in the 1q, while activities in utilities, finance & insurance as well as the public sector suffered a contraction. Although the economic growth was far softer than anticipated, the government still maintained its 2013 GDP growth forecast at 3.59%, following an upward revision in Feb of +0.06 ppt from the previous estimate. The outlook then was for global economic conditions to stabilize, and strong investment demand from various industries (including semiconductor, telecommunication and travel-related sectors) and the launch of innovative ICT products to boost capital asset formation and exports. As a whole, we still expect real GDP growth to improve moderately to 2.8% in 2013, compared with +1.26% in 2012.
Taiwans Real GDP Growth

E
F E A F T A x T t x M t a R c i r s o k | s |

chg, yoy

15%
10% 5% 0% -5% -10% -15%

Real GDP Consumption Investment Exports of g+s imports of g+s

Contribution to Real GDP Growth (%pt)

Net exports
6%

Consumption Investment

4%
2%

0%
-2%

-20%
-25%

-4%
-6%

2q12

3q12

4q12

1q11

4q11

3q12

4q12

2q11

3q11

1q12

2q12

Source: DGBAS, OSK-DMG

See important disclosures at the end of this report

1q13

1q13

1q11

2q11

3q11

4q11

1q12

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