TAIWAN’S economy grew at its fastest pace in nearly two years in the fourth quarter on strong demand for its technology products, but rising global trade protectionism is clouding the outlook.
While the trade-dependent economy has recovered from a brief recession in late 2015, its fortunes could deteriorate again on trade frictions, especially between the United States and the Chinese mainland, its two largest trading partners.
The withdrawal of the United States from a broad trans-Pacific trade pact could have wider implications for Asian exporters such as Taiwan.
“The impact and subsequent measures by the United States’ protectionist policy of backing out of the Trans-Pacific Partnership will be watched,” Jack Huang, an official with the Directorate General of Budget, Accounting and Statistics, told a news conference yesterday.
Gross domestic product expanded 2.58 percent in the October-December quarter from a year earlier, up from 2.03 percent in the prior quarter, but was slower than 3.1 percent forecast in a Reuters poll.
Momentum showed signs of cooling, with the economy growing at half the pace of the previous quarter, by a seasonally adjusted annualized 1.89 percent.
The economy managed to grow 1.4 percent in 2016, faster than 0.72 percent the previous year, helped by strong exports at the year-end, but this looks unlikely to be sustained due to global uncertainties and weak growth in Taiwan’s key export markets.
Taiwanese manufacturers produce a vast array of high-tech goods that are a key engine of growth for the economy. Exports grew in the final quarter of last year, while export orders and industrial output have both been positive since August.
Domestic demand was driven in the fourth quarter by capital formation primarily from investments in the semiconductor sector, but private and government consumption remained weak, the data showed.