Taiwan’s growth likely to slow in Q2 ’24 – poll

Taiwan’s economic growth is likely to have moderated in the second quarter of 2024, a Reuters poll revealed on Monday.

This comes despite a strong showing from the export sector, driven by high demand for artificial intelligence (AI) technology.

According to the median forecast of 25 economists surveyed, Taiwan’s gross domestic product (GDP) is expected to have expanded by 4.8 per cent year-on-year during the April-June period. This marks a slowdown from the robust 6.56 per cent growth recorded in the first quarter, which benefited from exports and construction activity but saw muted domestic consumption.

The poll forecasts for the preliminary GDP data, scheduled for release on Wednesday, range from a low of 2.5 per cent to a high of 6.8 per cent.

Taiwan, a major player in the global technology supply chain for companies like Apple and Nvidia, is expected to benefit from robust shipments from its technology sector.

This is particularly true for chipmakers riding the wave of AI demand, with second-quarter exports rising 9.9 per cent year-on-year.

This is slower than the first quarter’s growth of 12.9 per cent, but still a positive sign. The island is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker.

“Exports (in Q2) were pretty solid, with stronger momentum from AI-related products,” said analyst Kevin Wang of Taishin Securities Investment Advisory. “With respect to business investments, major companies were conservative, with the exception of TSMC.”

The second half of the year typically brings a peak season for Taiwanese exporters as they ramp up production for the year-end holiday season in major Western markets.

The government’s statistics bureau previously revised its full-year growth forecast for 2024 upwards to 3.94 per cent, compared to the initial projection of 3.43 per cent.

Last year, the Taiwanese economy recorded its slowest growth in 14 years, expanding by only 1.31 per cent.

The Asian Development Bank (ADB) also recently adjusted its 2024 growth outlook for Taiwan, raising it to 3.5 per cent from 3 per cent previously. This revision is attributed to the strong performance of chip exports and the booming AI market.

However, a potential concern lies in China, Taiwan’s largest export market. China’s weaker-than-expected growth in the second quarter could dampen future shipments to the world’s second-largest economy.

Taiwan’s preliminary GDP data will be released in a statement with minimal commentary. Revised figures with more details and forward-looking forecasts are expected to be released a few weeks later.

Attribution: Reuters