Taiwan Bucks Asia Slowdown With Fastest Growth in 5 Quarters

(Bloomberg) --

Taiwan’s economy grew at the fastest pace since the second quarter of last year as domestic investment and better-than-expected overseas demand helped avoid the worst of the U.S.-China trade war.

• Gross domestic product expanded 2.91% in the third quarter, according to a statement from the island’s statistics bureau on Thursday.
• That was the fastest rate of expansion since the three months through June last year, and higher than the 2.45% median estimate of 20 economists surveyed by Bloomberg.
• The government raised its full-year GDP estimate to 2.53% from 2.46% it forecast in August.
• The statistics bureau sees the economy expanding 2.9% in 4Q.

Key Insights

• The drivers for growth were domestic production and better-than-expected external demand, along with investment, the statistics bureau said.
• Competition between the U.S. and China is likely to drag on global growth, but rising risks are also pushing a revitalization of once-lackluster investment in Taiwan, Natixis SA economists Alicia Garcia Herrero and Gary Ng said in a research note Wednesday. While trade remains dependent on global developments, investment inflows are more likely to have a longer-term impact by nurturing new industries and creating new supply chains and jobs, according to the note.
• Taiwan’s continued economic resilience is in stark contrast to its fellow East Asian economies. South Korea is in line for its weakest growth since the global financial crisis as concerns regarding the trade war scare off investment, and Japan’s economy is forecast to have slowed in the third quarter.
• Hong Kong entered a recession as the economic impact of nearly five months of anti-government protests exceeded economists’ worst estimates.

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• A surge in foreign inflows has made the Taiwanese dollar Asia’s best-performing currency over the past three months.
• Central bank Governor Yang Chin-long told legislators earlier this month that Taiwan is well-placed to weather the trade war and will likely see increased orders from U.S. clients.

To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net;Samson Ellis in Taipei at sellis29@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger

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