Taiwan’s Economy Grows in Second Quarter on Stronger Exports

Taiwan’s economy expanded in the three months through June -- ending three consecutive quarters of contraction -- driven by increased demand for electronic goods and suggesting no need to rush to cut interest rates further.

Gross domestic product rose 0.69 percent in the second quarter from a year earlier, preliminary data released by the statistics bureau showed Friday. That compares with the median estimate for a 0.7 percent gain in a Bloomberg survey and follows a 0.68 percent drop in the first quarter.

Exports of electronic goods or machinery, accounting for the biggest proportion of the island’s exports, jumped 5.2 percent in June as components makers increased supply ahead of the debut of Apple Inc.’s new iPhone model later this year.

"External demand recovered in May and June, led by solid semiconductor demand," Raymond Yeung and Louis Lam, economists at Australia & New Zealand Banking Group Ltd. in Hong Kong, wrote in a report. "As growth has stabilized recently, we believe the rate cutting cycle has ended."

Taiwan’s central bank lowered the benchmark rate in June to 1.375 percent and in the same month urged the government to adopt expansionary fiscal policies to bolster the economy.

The benchmark Taiex stock index closed 1 percent lower at 8,984.41. As of the midday trading recess, the Taiwan dollar gained 0.2 percent to NT$31.895 per U.S. dollar. The currency has risen 3.5 percent against the greenback this year.

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