Taiwan’s economy contracts again in Q1 2016, growth outlook continues to be gloomy

The Taiwanese economy shrank in the first quarter of 2016. The GDP contracted 0.84% y/y after shrinking for two straight quarters. Meanwhile, the nation’s economic growth expanded at a seasonally adjusted rate of 0.19% q/q, as compared with Q4 2015’s 0.54% growth. This indicates a slowdown in growth momentum, according to Commerzbank.

Looking at details, the sluggish trade performance was mainly responsible for the slowdown in the headline GDP figure. In the first quarter, exports shrank 3.93% y/y, while gross capital formation dropped 2.48%. Meanwhile, private consumption continued to be stable, expanding 1.84% y/y, as compared with Q4 2015’s 1.46% growth. Government spending quickened from previous quarter’s -0.06% to 5.51% y/y in Q1 2016.

The economic growth prospect for Taiwan continues to be dull, noted Commerzbank. The Taiwanese economic growth majorly relies on the outlook of global economic growth. The recent US activity data shows further slowdown in foreign demand that might keep on weighing on Taiwan’s economic outlook in the future. Exports of the country have been declining for over one year.