Taiwan seen growing 4% in Q3 on pandemic hit, but exports help

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  • Preliminary Q3 GDP seen at 4% y/y (prior qtr +7.43%)
  • Taiwan's domestic COVID-19 outbreak hit consumption hard
  • Data due Friday, Oct 29, after 4 p.m. (0800 GMT)

TAIPEI, Oct 26 (Reuters) - Taiwan's trade-reliant economy is expected to have expanded at a slower pace in the third quarter due to the island's COVID-19 outbreak, a Reuters poll showed, though supported by export growth and healthy global demand for semiconductors.

Gross domestic product (GDP) likely expanded 4% in the July-September period versus a year ago, the poll of 27 economists shows, after it grew 7.43% year-on-year in the second quarter. read more

That would be its slowest rate of growth since logging 5.09% in the fourth quarter of last year.

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As a key hub in the global technology supply chain for giants such as Apple Inc (AAPL.O), Taiwan's economy has outperformed many of its regional peers during the COVID-19 pandemic as it benefited from robust demand for its tech exports during the work-and-study-from-home trend.

But domestic consumption was hit by a rare rise in community COVID-19 transmissions starting mid-May and imposition of strict restrictions on gatherings and other curbs. The outbreak has now ended, and the government has been issuing shopping coupons to help restore consumer confidence. read more

Economists' forecasts for preliminary GDP data due on Friday varied widely from growth of 2.5% to as high as 6.5%.

Kevin Wang, an economist at Taishin Securities Investment Advisory Co, said the drop-off in growth was because of the impact on consumption from the COVID-19 outbreak at home.

"At present, although exports in the third quarter have eased, they are still not bad. Investment seems to be OK too," he added.

Firms like Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) have also seen demand soar from a global shortage of chips that has shuttered some auto production lines and affected consumer electronics.

Exports in September were the highest monthly figure on record, rising an expectation beating 29.2% from a year earlier to $39.65 billion.

The government has remained bullish about Taiwan's full-year GDP prospects though, with policy makers including the central bank governor saying it could grow 6% this year, higher than current official forecasts.

The International Monetary Fund this month raised its prediction for Taiwan's 2021 growth to 5.9% from 4.7% seen in April.

However, the economy in China, Taiwan's top trading partner, grew at the slowest pace in a year in the third quarter, 4.9% from a year earlier, hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks. read more

Taiwan's preliminary figures will be released in a statement with minimal commentary. Revised figures will be released later in November, with more details and forward-looking forecasts.

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Poll compiled by Carol Lee; Reporting by Jeanny Kao and Ben Blanchard; editing by Jane Wardell

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