Taiwan’s economy grew at the slowest pace in a year in the third quarter, as a weak global recovery reduced demand for the island’s exports, increasing pressure on the central bank to extend an interest-rate pause.
Gross domestic product rose 1.58 percent from a year earlier, the statistics bureau said in a preliminary report in Taipei today, after increasing 2.49 percent in the second quarter. The median estimate of 22 economists in a Bloomberg News survey was 2.57 percent.
A less-than-projected payroll increase in the U.S. in September indicates momentum in the world’s largest economy may be slowing, while China has pared its growth ambitions, targeting annual expansion of 7 percent this decade. Taiwan central bank Governor Perng Fai-nan said this week the island’s expansion isn’t as strong as earlier this year.
“The economic recovery may be losing steam,” Raymond Yeung, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. wrote in a note today. “The short-term outlook faces strong headwinds,” he said, adding that the monetary authority may remain accommodative until at least the second quarter of next year.
The central bank held the benchmark interest rate at 1.875 percent for a ninth straight meeting in September, the longest period of inaction. Taiwan in August lowered its forecast for growth this year to 2.31 percent from 2.4 percent.
The economy expanded a seasonally-adjusted 0.09 percent in the third quarter from the previous quarter, today’s report showed. Exports contributed 0.65 percentage-point to GDP growth, down from 2.08 in the second quarter.
HTC Corp. (2498), Taiwan’s biggest mobile-phone maker, earlier this month reported its first quarterly loss after giving up market share to Apple Inc. and Samsung Electronics Co.
President Ma Ying-jeou has sought closer trade and investment ties with China, Taiwan’s biggest trading partner, to aid the island’s economic expansion. An agreement opening certain services sectors with China is awaiting legislative approval in Taiwan.
Private consumption increased 1.56 percent in the third quarter from a year earlier and manufacturing rose 1.66 percent, today’s report showed. The statistics bureau is scheduled to report final data on Nov. 29.
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