Alexa
  • Directory of Taiwan

NDC: domestic demand remains strong

NDC: domestic demand remains strong

Taipei, July 31 (CNA) The National Development Council (NDC) said Friday that although Taiwan's economy grew at a slower-than-expected pace in the second quarter, local demand remained strong.
The NDC said that weaker-than-expected exports in the three-month period was responsible for the weaker economic growth, but higher-than-expected domestic demand still pushed the local economy ahead.
The Directorate General of Budget, Accounting and Statistics (DGBAS) released its advance estimate Friday, reporting that Taiwan's gross domestic product (GDP) grew only 0.64 percent year-on-year in the second quarter, far behind an earlier forecast of a 3.05 percent increase.
The DGBAS cited a year-on-year contraction of 1.30 percent in merchandise and services exports as the reason for the disappointing GDP growth in the second quarter.
The NDC response to the weaker-than-expected second-quarter GDP growth has been perceived as a way for the government to reinforce public confidence after the second-quarter data.
The council said that domestic demand for the second quarter rose 3.03 percent from a year earlier, surpassing the previous forecast of a 2.44 percent increase the DGBAS made in May, due to higher private consumption and capital formation.
The council added that the data shows that local demand remained sound. The domestic demand growth contributed 2.71 percentage points to the second quarter's economic growth.
In the second quarter, private consumption rose 2.81 percent from a year earlier, compared with an earlier forecast of 2.75 percent on the back of higher retail sales. Capital formation in the quarter grew 5.42 percent year-on-year, topping an earlier estimate of 3.81 due to higher production equipment investment.
Chiou Jiunn-rong, an economics professor at National Central University, said that if local employers raise salaries to stimulate private consumption, domestic demand growth momentum is expected to continue.
Chiou said that at a time when global demand remains fragile, Taiwan should use the higher domestic demand to make up for export weakness and push up the entire economy.
In the second quarter, Taiwan's merchandise and service exports fell 1.30 percent from a year earlier, lagging behind an earlier forecast of a 3.27 percent increase made by the DGBAS.
Tseng Ming-chung, chairman of the Financial Supervisory Commission (FSC), said he was caught off-guard by the second- quarter GDP data, but he remained upbeat about global demand in the second half of this year due to peak season effects.
Tseng said it is likely that Taiwan's exports will pick up in the second half of the year.
To boost the local economy, Tseng said the FSC has come up with a series of measures, including a plan in which the government will coordinate the local banking sector to loan NT$740 billion (US$23.49 billion) to local enterprises to allow them to expand. (By Chen Cheng-wei, Tsai Yi-chu and Frances Huang)


Updated : 2021-09-17 05:32 GMT+08:00