Taiwan’s economy unexpectedly shrank last quarter, recording its worst contraction since the global financial crisis as waning global demand brought to an end a pandemic-fueled trade boom.
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Taiwan’s economy unexpectedly shrank last quarter, recording its worst contraction since the global financial crisis as waning global demand brought to an end a pandemic-fueled trade boom.
Gross domestic product for the October-to-December quarter fell 0.86% from a year earlier, advanced figures from the Taiwan Directorate General of Budget, Accounting and Statistics showed Wednesday.
That was the first fall since the beginning of 2016, and the worst percentage decline since the third quarter of 2009. Economists surveyed by Bloomberg were expecting growth of 1.2%.
The fourth-quarter slump “is the biggest decline seen since the financial crisis,” Wu Pei-hsuan, a senior executive officer at Taiwan’s statistics bureau, said at a press briefing in Taipei Wednesday.
Economic growth exploded in 2021 as the world began reopening from the pandemic. Taiwan enjoyed surging exports for its semiconductor and other products during that time, which drove growth. But the economy was pressured last year as inflation rose and interest rates skyrocketed, tempering global demand.
Exports to China, one of Taiwan’s most important trading partners, were hammered as the world’s second-largest economy remained isolated from much of the world under Covid Zero. Activity in China was also hampered in December as it abandoned virus curbs and infections spread.
Exports to China and Hong Kong in the fourth quarter plunged 15.6% from a year earlier, Wu said.
The drag on the economy was “clearly from exports,” said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. By comparison, private consumption demand saw “respectable growth.”
“From the way things look, I don’t think we have seen the bottom and there’s a prospect of a technical recession in the first quarter,” she added.
GDP expanded 2.43% for all of 2022, the statistics data showed. That was slightly worse than expectations that the economy would grow 2.9% for the year, according to the Bloomberg survey. It was the slowest annual rate of growth since 2016.
–With assistance from Cindy Wang.
(Updates with analyst commentary and official remarks.)
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