Taiwan Q2 GDP likely to rise for first time in one year

Taiwan’s gross domestic product during the second quarter is expected to rise, posting the first rise over the past four quarters. The spur in headline growth is likely to happen on account of rise in exports, seasonal increase in demand for electronic goods and the near growth stabilization in China.

Headline growth in Taiwan is expected to rise 0.9 percent y/y and is likely to stay in the positive territory during the second half of 2016. Moreover, from a longer-term perspective, GDP growth has fallen to 2.5 percent on average in 2011-15, sharply down from 4.2 percent in 2001-10.

However, a notable rebound is unlikely as the global economy remains on a soft patch and domestic policy stimulus is too small to offset the external weakness. Moreover, the structural headwinds including population aging and the decline in trade competitiveness is expected to limit the upside, DBS reported.

In contrast to spike in electronics demand amid mild rebound in global commodities market, private consumption growth may have slowed as rising unemployment problem and decline in consumer confidence are expected to exert slight pressure on rising growth.

"We expect growth to remain subpar at 0.9 percent in 2016 and 1.8 percent in 2017. The talk about L-shaped growth will likely continue," DBS commented in its recent research note.