TAIPEI- Taiwan’s trade-reliant economy is expected to have expanded on the back of strong global demand for computer chips, though COVID-19 lockdowns in top export market China and a surge in domestic infections could drag on demand, a Reuters poll showed.
Gross domestic product (GDP) likely grew 3.1 percent in April-June versus a year earlier, the poll of 24 economists shows, after it expanded 3.14 percent year-on-year in the first quarter.
Policymakers have said they expect full-year 2022 growth of less than 4 percent, downgrading it from previous forecasts of more than 4 percent and slower than the 6.45 percent logged for 2021. That was the fastest rate in over a decade since it expanded 10.25 percent in 2010.
Economists’ forecasts for preliminary GDP data due on Friday varied widely from growth of 1.4 percent to as high as 4.4 percent.
“Investment should be the key growth driver in 2Q, thanks to the still strong capital spending among the leading semiconductor firms,” said analysts at DBS bank.
Demand for Taiwanese goods has been hit by COVID-19 lockdowns in China, while domestic consumption has taken a hit from a surge in local cases, though infections are now waning and Taiwan has never fully locked down.
As a key hub in the global technology supply chain for giants such as Apple Inc, Taiwan’s economy has outperformed many of its regional peers.
A global shortage of semiconductors has swelled order books for Taiwanese chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
TSMC reported forecast-beating second quarter earnings this month, saying it was “highly confident” about its long-term prospects.
The economy in China, Taiwan’s largest trading partner, grew a tepid 0.4 percent in the second quarter, highlighting the colossal toll on activity from widespread COVID-19 lockdowns.
Taiwan’s preliminary figures will be released in a statement with minimal commentary. Revised figures will be released a few weeks later, with more details and forward-looking forecasts.
Taiwan’s exports rose for a 23rd straight month in May on the back of sustained demand for technology despite China’s tough COVID-19 lockdowns, and the government said the outlook was good even as the Ukraine war and inflation cast shadows on demand.
Exports rose 12.5 percent in May from a year earlier to $42.08 billion, the Ministry of Finance said on Wednesday, the second highest monthly figure on record.
That was slower than the 18.8 percent leap recorded in April, but largely in line with the forecast from a Reuters survey of analysts for a 13 percent rise for the month.
The ministry attributed the May growth to strong technology demand, even as China’s strict COVID-19 lockdowns “disrupted some export momentum”.
Exports of electronics components rose 25.9 percent in May to $16.71 billion, with semiconductor exports jumping 28.3 percent from a year earlier.
Many companies expect global chip shortages to last at least for the rest of the year, which will continue to fill Taiwanese semiconductor firms’ order books.
