TAIPEI (Reuters) – Taiwan’s economic growth probably slowed further in the second quarter to its weakest in more than four years, a Reuters poll showed, as softer consumer spending during the coronavirus pandemic offsets strong electronics exports.
The government has warned of a deeper slowdown and is rolling out a stimulus package worth T$1.05 trillion ($35.9 billion) to cushion the impact from the pandemic, which has hit the island’s services sector and tourism.
The trade-reliant economy, a key part of the global technology supply chain, is likely to grow 0.55% in April-June compared with a year earlier, the poll of 16 economists predicted. That would be the slowest pace since the first quarter of 2016 and down from 1.59% in the first quarter.
Still-strong global demand for electronics, however, helped offset some of the impact as tech products flourished with more people working from home due to social distancing measures to halt the spread of the coronavirus.
The island’s June export orders grew at their fastest pace in nearly two years, boosted by strong demand for telecommuting products such as laptops.
Taiwan has avoided the lockdowns seen in other parts of the world, as early measures prevented a rapid spread of the respiratory disease. It now has only 20 active cases.
Some analysts have turned more bullish on Taiwan’s growth outlook, citing the island’s stronger-than-expected technology exports and effective virus-containment measures, which they say will boost domestic demand in the months to come.
“The hit to both domestic and external demand will likely be less severe than what we had previously expected,” Fitch Solutions said in a July note, raising its 2020 growth forecast for Taiwan to 0.9% from 0.5% previously.
Economic growth is likely to slow to a five-year low this year of 1.67%, the government said in May, from 2.71% in 2019.
Preliminary second quarter figures will be released on Friday. Revised figures, including details and government forecasts, will be published about three weeks later.
(Poll compiled by Carol Lee; Reporting by Yimou Lee; Editing by Jacqueline Wong)
