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Economy

Taiwan's Q2 GDP growth slows but exports remain strong

COVID-19 impact on economy mitigated by global work-from-home boom

Taiwan has been able to sustain exports with increased demand for electronic equipment needed by people working from home.    © Reuters

TAIPEI (Reuters) -- Taiwan's economy grew at a slower pace in the second quarter as a sudden spike in domestic COVID-19 cases weighed on consumption, though the island's hi-tech exports remained strong as the global "work from home" boom shows no sign of easing.

Gross domestic product (GDP) grew 7.47% in April-June from a year earlier, preliminary data from the statistics agency showed on Friday.

The reading was well above the 6.05% increase forecast in a Reuters poll, but down from the first quarter's 8.92% rise.

Compared with the first quarter, the seasonally adjusted annual rate of growth declined 7.86% in the second quarter, compared to a 12.93% gain in the first quarter.

The government attributed the slower headline growth rate to a drop on consumption after it imposed curbs on personal gatherings, closed entertainment venues and restricted restaurant operations to contain a sudden surge in COVID-19 cases. The outbreak has since been contained and restrictions were eased this week.

However, exports continued to surge on demand for electronics, driven by new technologies such as 5G and by people working from home due to the coronavirus pandemic. Pent-up demand in countries emerging from lockdowns has also boosted sales, while microchip prices are surging due to a global shortage.

Total exports rose 37.35% in the second quarter year-on-year in U.S. dollar terms, while exports of electronics components rose 31.09% and those of communication and audio-visual products leapt 28.74%, the agency said.

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