Taiwan’s economy, which is heavily reliant on exports and technology, is projected to have grown faster in the first quarter of the year. A Reuters poll of 18 economists forecasts that Gross Domestic Product (GDP) will have expanded by 5.65% compared to the same period last year. This growth follows a 4.93% increase in GDP during the fourth quarter of the previous year.
The first quarter saw a surge in exports of 12.9% year-on-year, significantly higher than the 3.4% growth seen in the fourth quarter. The increase was driven by Taiwan’s tech-heavy industries, particularly chipmakers, who capitalized on rising demand for artificial intelligence (AI) technology. This led to a resurgence in manufacturing activity and low unemployment rates.
Analysts predict that the first quarter will be the strongest for GDP growth this year, with a slight dip to around 3.5% in the second quarter. The government has raised its forecast for full-year growth in 2024 from an initial prediction of 3.35% to 3.43%, indicating optimism about the economy’s prospects after a year where it expanded by just 1.31%, its slowest pace in over a decade.
Taiwan’s largest export market, China, also experienced faster-than-expected growth in the first quarter, expanding by 5.3% year-on-year. Taiwan plays a critical role in global technology supply chains, serving companies such as Apple and Nvidia and housing world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co.
The preliminary GDP data for Taiwan will be released with limited commentary followed by revised figures with more detailed analysis and future projections. Despite these positive signs, challenges remain ahead for Taiwan’s economy, including rising trade tensions between China and other countries and political uncertainties at home.
Overall, while Taiwan’s economy remains positive due to strong export performance and growing demand for AI technology, there are still risks ahead that could impact its continued growth trajectory going forward into second half of this year and beyond