Taiwan falls into recession in 1Q23
By ECCT staff writers, DGBAS
Taiwan’s economy is now in a recession after experiencing a second consecutive quarter of gross domestic product (GDP) contraction, the commonly accepted definition of a recession. According to an “advance estimate” of GDP activity by the Directorate General of Budget Accounting and Statistics (DGBAS), real GDP contracted by 3.02% on a year-on-year (y-o-y) basis in the first quarter of 2023 (1Q23), after shrinking by 0.41% y-o-y in 4Q22.
According to the DGBAS real exports of goods and services dropped by 10.86% y-o-y, mainly caused by weak global demand and inventory adjustments in 1Q23 while imports fell by 4.17% y-o-y. In terms of gross capital formation, investment in machinery equipment and intellectual property products grew continuously. However, investment in construction and transportation equipment fell. Combining the reduction of inventory, real gross capital formation declined by 4.15% y-o-y. Real private final consumption grew by 6.60% y-o-y in 1Q23, mainly driven by strong rebound in spending on vehicles, dining out, accommodation, recreation and transportation, as well as the flourishing outbound tourism owing to the reopening of borders.
In other GDP news, Taiwan's per capita gross domestic product (GDP) has surpassed South Korea's for the first time since 2004. According to data released by the Ministry of Economic Affairs (MOEA), Taiwan's GDP per capita stood at US$32,811 in 2022, more than South Korea's US$32,237.
The comparison and contrast between the two countries are drawn because of their similar population density, economic development models and industrial structure. Officials said that Taiwan's economy grew by 3.2% each year on average from 2013-2022, higher than South Korea's annual average of 2.6%.