South China Morning Post (31/01/2019) - Taiwan’s economy grew at its slowest in more than two years in the fourth quarter of 2018 as the island’s technology exports floundered amid weaker global demand and the trade war between China and the United States.
The economy’s prospects look dimmer this year as rising trade protectionism and a slowing Chinese economy begin to take a toll on demand for semiconductors and other electronics.
Gross domestic product expanded 1.76 per cent in the October-December period from a year earlier, preliminary data showed on Thursday, the slowest pace since June 2016 and down from 2.27 per cent in the third quarter.
A Reuters poll of economists had estimated growth of 2 per cent.
For 2018 overall, growth was 2.60 per cent, the government statistics agency said, compared with the government’s downwardly revised forecast of 2.66 per cent.
In 2017, the economy expanded 3.08 per cent, according to the latest government data.
Analysts expect Taiwan’s economic growth to slow further in 2019 due to spillover from trade tensions between the United States and China – its two largest trading partners.
“The figures announced today are roughly within expectations mainly because Apple sales fell short of expectations in the fourth quarter,” said Kevin Wang, analyst at Taishin Investment Advisory.
Taiwan exports orders suffer sharpest drop in 32 months
Wang, who expects the trade dispute to weigh on Taiwan’s exports, is forecasting growth of 1.8-2.0 per cent in 2019.
Taiwan’s central bank, in minutes released earlier on Thursday, said it expected the economy to grow steadily this year helped by appropriately loose monetary policy.
Earlier this month, the Ministry of Economic Affairs said it was “not too optimistic” that first quarter orders growth would be strong, and it expected January export orders to decline by 11.8 per cent to 14.1 per cent from a year earlier.
Export orders often foreshadow actual shipments from Taiwan and other Asian manufacturing economies.
“We expect growth to remain weak over the quarters ahead. On the plus side, domestic demand should strengthen slightly, supported by rapid infrastructure spending,” said Chang Liu, economist at Capital Economics.
“However, export demand will probably soften in the year ahead due to a combination of slower global growth and a downturn in the technology sector.”
Apple shares plunge after blaming weak revenue on China slowdown, trade war
At least two of the island’s heavyweight companies, chip maker Taiwan Semiconductor Manufacturing Co (TSMC) and manufacturer Foxconn, formally known as Hon Hai Precision Industry Co, count technology giant Apple Inc as a major customer.
In January, Apple took the rare step of cutting its quarterly sales forecast, with chief executive Tim Cook blaming slow iPhone sales in China.
TSMC, the world’s largest contract chip maker, has cut full-year investment and forecast its sharpest quarterly revenue fall in a decade for the first quarter, joining a string of technology companies warning of a slowdown in global smartphone demand.
“We are keeping our [growth] forecast for this year at 2 per cent, but the risks are to the downside,” Chang Liu said.
Read more at https://www.scmp.com/economy/china-economy/article/2184509/taiwan-growth-hit-low-technology-exports-and-us-china-trade