Taiwan's trade-dependent economy is anticipated to have experienced accelerated growth in the fourth quarter of the year, largely attributed to robust domestic consumption and a resurgence in exports, according to a recent Reuters poll of 22 economists.
Gross domestic product (GDP) for the October-December period is expected to have expanded by approximately 4.35% compared to the same period in the previous year, marking a notable increase from the 2.32% year-on-year growth observed in the third quarter. However, economists' forecasts for the preliminary GDP data slated for release on Wednesday exhibit a wide range, spanning from a modest 1.5% expansion to a more substantial 6.5%.
Taiwan's exports, which had been in decline for nearly a year, began to recover in September. In the fourth quarter, exports surged by 3.4% compared to the same period in 2022, a stark contrast to the third quarter's annual contraction of 5.1%. Additionally, the island nation's trade surplus soared by 131% year-on-year in the final quarter of the year.
Domestic consumption has also shown signs of a robust rebound after grappling with the impact of the COVID-19 pandemic. Recently, restaurant chain Wowprime announced plans to hire approximately 400 new employees in the first quarter, citing a surge in demand.
Experts suggest that the growth in the fourth quarter was primarily driven by strong private consumption, coupled with a favorable trade surplus. Analysts at DBS Bank predicted a robust recovery for Taiwan in the coming year, with GDP expected to expand by 3.5%, positioning Taiwan as one of the leading performers in the Asian region.
However, the government's statistics bureau had previously forecasted full-year growth for 2023 to be 1.42%, representing the slowest pace in 14 years and a decline from the 2.45% growth recorded in 2022.
It's worth noting that China, Taiwan's largest export market, experienced a year-on-year GDP growth rate of 5.2% in the fourth quarter, an improvement from the 4.9% growth observed in the third quarter but falling slightly short of a 5.3% forecast in a Reuters poll.
Taiwan plays a pivotal role in the global technology supply chain, serving major companies like Apple and Nvidia, and is home to the world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co.
The preliminary GDP reading for Taiwan will be released as a statement with minimal commentary, while revised figures with more comprehensive details and forward-looking forecasts will follow in the coming weeks.