2024 GDP forecast raised to 4.27%

By ECCT staff writers, DGBAS

Taiwan’s real GDP increased by 4.17% on a year-on-year basis in the third quarter of 2024 (3Q24), according to the latest report from the Directorate General of Budget Accounting and Statistics (DGBAS), which was 0.2 percentage points higher than its previous forecast, while the economic growth rates for 1Q24 and 2Q24 have been revised to 6.64% and 4.89% (formerly 6.63% and 5.06%).

According to the report, real private final consumption grew by 2.31% in 3Q24, mainly driven by expenditures on services such as recreation and outbound tourism, as well as the securities and funds transaction fees caused by a robust financial market. Due to the thriving of emerging technologies, such as artificial intelligence (AI), demand for Information and Communication Products remained strong, and real exports of goods and services grew by 8.92% (yoy) while imports also grew by 14.71% (yoy) in the quarter. Regarding gross capital formation, investments in machinery equipment, construction and intellectual property products increased. Combining inventory changes, real gross capital formation expanded by 17.51% in the quarter. On the production side, the manufacturing sector grew by 8.63% (yoy) in 3Q24, following the 10.08% increase in the previous quarter, mainly due to the output expansion of semiconductors and computers, electronic & optical products. Meanwhile the wholesale & retail trade sector increased by 4.57%, after an expansion of 5.3% in the previous quarter. The transportation and storage sector grew by 1.8% in 3Q24 due to the growing number of passengers taking land and air transport. The financial and insurance sector increased by 11.98% in the quarter, following 13.68% growth in the previous quarter.

According to the DGBAS, for the full year in 2024, the global economy is anticipated to expand steadily, facilitated by moderating inflation and increasing 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 weak performance of traditional products, Taiwan’s exports of ICT products have been driven by the growing demand for AI. In aggregate with services exports, real exports of goods and services are expected to grow by 9.08% in 2024 overall. Real private consumption will grow by 2.72%, supported by the steady real wage hikes and booming outbound travel while real private fixed capital formation is projected to increase by 4.73%. In response to the soaring demand for AI applications and high-tech products, semiconductor companies have been expanding their capacity in advanced process and packaging technology and boosting R&D spending. In addition, transportation companies' fleet expansion will further contribute to Taiwan’s investment growth. Combining the above components as well as the public sector, Taiwan’s real GDP is projected to grow by 4.27% in 2024, revised upward by 0.37 percentage points from the previous forecast.