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Taiwan Q2 GDP to gain from chip exports, but face COVID headwinds

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TAIPEI — Taiwan’s trade-reliant economy

is expected to have expanded on the back of strong global demand

for computer chips, though COVID-19 lockdowns in top export

market China and a surge in domestic infections could drag on

demand, a Reuters poll showed.

Gross domestic product (GDP) likely grew 3.1% in April-June

versus a year earlier, the poll of 24 economists shows, after it

expanded 3.14% year-on-year in the first quarter.

Policymakers have said they expect full-year 2022 growth of

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less than 4%, downgrading it from previous forecasts of more

than 4% and slower than the 6.45% logged for 2021. That was the

fastest rate in over a decade since it expanded 10.25% in 2010.

Economists’ forecasts for preliminary GDP data due on Friday

varied widely from growth of 1.4% to as high as 4.4%.

“Investment should be the key growth driver in 2Q, thanks to

the still strong capital spending among the leading

semiconductor firms,” said analysts at DBS bank.

Demand for Taiwanese goods has been hit by COVID-19

lockdowns in China, while domestic consumption has taken a hit

from a surge in local cases, though infections are now waning

and Taiwan has never fully locked down.

As a key hub in the global technology supply chain for

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giants such as Apple Inc , Taiwan’s economy has

outperformed many of its regional peers.

A global shortage of semiconductors has swelled order books

for Taiwanese chipmakers such as Taiwan Semiconductor

Manufacturing Co Ltd (TSMC) .

TSMC reported forecast-beating second quarter earnings this

month, saying it was “highly confident” about its long-term


The economy in China, Taiwan’s largest trading partner, grew

a tepid 0.4% in the second quarter, highlighting the colossal

toll on activity from widespread COVID-19 lockdowns.

Taiwan’s preliminary figures will be released in a statement

with minimal commentary. Revised figures will be released a few

weeks later, with more details and forward-looking forecasts.

(Poll compiled by Arsh Mogre, Anant Chandak, Devayani Sathyan

and Carol Lee; Reporting by Ben Blanchard and Yimou Lee; Editing

by Jacqueline Wong)

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