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Economic Daily News: Taiwan's economy shows signs of stagnation

Economic Daily News: Taiwan's economy shows signs of stagnation

A report released last week by the Directorate General of Budget, Accounting and Statistics shows that Taiwan's GDP rose only 0.64 percent from a year earlier in the second quarter, lagging behind an earlier forecast of a 3.05 percent increase.
The development has shattered Taiwan's hope of securing 3 percent economic growth for 2015, and it also serves as a signal that Taiwan's economy may sink into long-term stagnation.
In the second quarter, exports of goods and services contracted 1.3 percent, mainly due to a decline in exports of goods and a slowdown in the growth of exports of services.
The slow recovery of the world economy and the slowdown of China's economy have led to price cuts for staple goods and have upset exports of the old-economy sector. Inventories in the electronics industry remain high, which undermines the advantage enjoyed by Taiwan's high-end electronic products. China's efforts to build its own supply chain in the manufacturing sector also threaten the survival of Taiwan's mid- and low-end electronic products.
Although private consumption increased 2.81 percent in the second quarter, it was not as good as it appeared to be. The figure was inflated by an increasing number of people who traveled overseas, taking advantage of the depreciation of the Japanese yen and the euro.
Capital formation also appeared better than it really was. In the second quarter, capital formation rose 5.42 percent, mainly because of high inventories in the electronics supply chain.
Taiwan's economy faces a certain downward risk, and it is likely that various economic data will continue to move down. (Editorial abstract -- Aug. 6, 2015) (By Y.F. Low)


Updated : 2021-09-23 17:03 GMT+08:00