News
2Q24 GDP rises 5.06%
By ECCT staff writers, DGBAS
Taiwan’s real GDP in the second quarter of 2024 (2Q24) rose by 1.16% on a quarter-on-quarter, seasonally-adjusted annualized basis (saar) and 5.06% on a year-on-year (yoy) basis, according to the latest report from the Directorate General of Budget Accounting and Statistics (DGBAS). In addition, the DGBAS revised its previous economic growth rate for 1Q24 upwards by 6.63% (formerly 6.56%) and its full year forecast for 2024 downwards by 0.04 percentage points to 3.90%.
The DGBAS attributed the rise in growth in 1Q24 to thriving emerging technologies, such as artificial intelligence (AI), and the gradual recovery in end-user demand, which boosted real exports of goods and services by 7.65%. Imports also grew by 10.15%. In addition, real private final consumption expanded by 2.77% in the quarter, mainly driven by expenditures on services such as air passenger transport and outbound tourism, as well as the securities and funds transaction fees boosted by the flourishing financial market. In terms of gross capital formation, investments in machinery equipment, construction and intellectual property products increased. Combining inventory changes, real gross capital formation expanded by 14.78%. On the production side, the manufacturing sector increased by 10.11% in 2Q24, following the 6.51% increase in the previous quarter, mainly due to the output expansion of semiconductor and computers, electronic & optical products. Meanwhile the wholesale and retail trade sector increased by 5.08%, after the expansion of 5.46% in the previous quarter and the transportation and storage sector grew by 8.45% in 2Q24, due to the growing number of passengers taking land and air transport. The financial and insurance sector increased by 15.93% in 2Q24, following the 17.18% growth in the previous quarter.
Looking ahead to the rest of the year, the global economy is expected to grow at a steady pace, supported by moderating inflation and recovering demand. According to the International Monetary Fund (IMF), world trade volume is projected to grow by 3.1% in 2024, faster than 0.8% in 2023. Despite the sluggish recovery of traditional products, the strong demand for AI-related products has increased Taiwan’s exports of information, communication and audio-video products. In aggregate with services exports, real exports of goods and services are projected to grow by 7.76% in 2024. In addition, real private consumption is forecast to rise by 2.78%, supported by the strong labour market and rising wages, along with the wealth effect stemming from the rising stock market. Growth is also expected to benefit from the ongoing outbound travel boom. Finally, real private fixed capital formation is anticipated to increase by 3.89%. On the back of strong demand for AI applications and high-tech products, semiconductor companies have been expanding their capacity in advanced process and packaging technology at a faster pace. Moreover, several major international firms have announced plans to scale up investments in Taiwan, such as setting up R&D and data centres. In addition, the booming housing market will further contribute to Taiwan’s investment growth in construction. Combining the above components as well as the public sector, Taiwan’s real GDP is projected to grow by 3.90% in 2024, revised downwards by 0.04 percentage points from the previous forecast.
According to the DGBAS, the consumer price Index (CPI) will increase by 2.17%, revised upwards by 0.1 percentage point, mainly reflecting the increasing price in fruits and vegetables due to Typhoon Gaemi, price hikes in the services sector, such as food away from home, residential rents, and medical care services. The DGBAS also announced a forecast of 3.26% GDP growth in 2025, on the back of an anticipated 3.4% growth in global trade (according to the IMF’s forecast), boosted by accelerated expansion of AI applications.
