Taiwan Q2 GDP tops forecasts on AI boom

6:08 am Wednesday, July 31st, 2024

By Jeanny Kao and Faith Hung

TAIPEI (Reuters) – Taiwan’s trade-dependent economy grew more than expected in the second quarter thanks to stronger demand for new technology, such as artificial intelligence (AI).

Taiwan is a key hub in the global technology supply chain for companies such as Apple and Nvidia, and home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Gross domestic product grew by a preliminary 5.09% in the April-June period from a year earlier, the statistics agency said on Wednesday, beating the 4.8% growth forecast by analysts in a Reuters poll, but slower than the 6.56% expansion in the first quarter.

“All indexes monitoring investments were better in Q2 than Q1…there’s been a notably significant rise in demand for machinery equipment,” official Tsui-hua Wang of the Directorate-General of Budget, Accounting and Statistics told reporters.

And some analysts were optimistic about full-year predictions.

“Q2 GDP exceeds market forecasts. Analysts have raised full-year forecasts to 3.5% – 4%, or even above 4%, due to solid performance of exports and investments recently,” said analyst Jeng-yu Liu of First Capital Management.

Analysts see limited chances for Taiwan’s central bank to hike interest rates at its next quarterly rate-setting meeting in September.

Quarter-on-quarter, the economy grew at a seasonally adjusted annualised rate of 0.13%.

Shipments from the technology sector, boosted by global demand for AI-related products, will likely help the economic momentum.

Second-quarter exports rose 9.9% versus the same period in 2023, compared with the first quarter’s annual expansion of 12.9%.

The economy in China, Taiwan’s largest export market, grew much more slowly than expected in the second quarter, expanding 4.7%, its slowest since the first quarter of 2023 and missing a 5.1% analyst forecast in a Reuters poll.

(Additional reporting by Roger Tung; Editing by Andrew Heavens and Conor Humphries)