Consumption bolstering growth in Taiwan: Q4 sees lift

February 5, 2018

TAIPEI - Taiwan’s economy has grown faster in Q4 2017 and the economy is expected to continue to benefit from higher consumption demand in 2018, according to an analysis by French banking group Natixis. “On a positive note, exports will continue to expand rapidly but at a slower pace,” the analysis says.

“The key question mark comes from iPhone sales, and more generally the mobile phone sector, before other electronic products in the ecosystem of 5G or internet of things can take the lead.

“For consumption, a positive equity market performance has improved consumer confidence and will generate a positive wealth effect to bolster growth. In addition, rapid growth in inbound ASEAN and Chinese tourists will contribute to the pick-up in retail sales.”

Natixis says both exports and consumption should be strong enough to buffer still-lacklustre investment, which has been dragging down growth in 2017. “Although public investment has contributed to a larger part of GDP growth, the scale is too small to offset the overall decline in private sector investment.”

In summary, it adds, Taiwan will benefit from stronger domestic consumption on top of positive global trade momentum in 2018, offsetting the impact of weak investment. (ATI).