Taiwan’s economy grew at the slowest pace in three years as exports collapsed amid weaker global demand and rising competition from regional rivals.
Gross domestic product rose 0.64 percent in the three months through June from a year earlier, according to preliminary data released by the statistics bureau Friday. That compares with a pace of 3.37 percent in the previous quarter, and is lower than all estimates in a Bloomberg survey whose median was 2.55 percent.
Taiwan’s exports have fallen in five of six months this year as demand waned in the top destinations of China and the U.S. The island’s manufacturers are also battling with mainland firms upgrading their supply chains, while local consumption has been hurt by a fall in property and share prices.
“With its heavy concentration in the electronics sector, second-quarter GDP was hurt by the unusually low level of activity in the electronics supply chain,” said Wai Ho Leong, a Singapore-based regional economist at Barclays Plc. “This was then compounded” by the stock slide, he said.
Five-year government bond yields fell to the lowest in more than two years on Friday. The benchmark Taiex Index has fallen about 7 percent this year, while Taiwan’s dollar gained 2.5 percent in the first half of the year. It is the best performer among major Asian currencies, further hurting manufacturers competing with a weaker yen and Korean won.
Export orders, an indication of shipments in the next one to three months, dropped in the three months through June, signaling further pain to come. Taipei’s home prices slipped 2 percent in the first half, following at least nine straight years of gains, according to a Sinyi Realty Inc. index.
The government earlier this week announced measures to boost infrastructure investment and corporate credit to bolster the economy. Taiwan must increase competitiveness and reduce its reliance on low-margin contracting businesses, the National Development Council said.