Taiwan’s Economy: Preliminary Q4 GDP fell by 0.86%
Due to the COVID-related upheaval in its biggest market China and a decline in exports. This as a result of a slowing global tech demand, Taiwan’s economy unexpectedly shrank in the fourth quarter.
According to preliminary figures released by the statistics office on Wednesday. The annual gross domestic product (GDP) for the months of October through December decreased by 0.86% from the same time last year. As opposed to the previous quarter’s 4.01% growth.
That was worse than the 1.3% gain that a Reuters survey had predicted. On a seasonally adjusted annual rate, the GDP shrank by 4.24% from the previous quarter. Compared to the 6.53% recorded for 2021. The GDP expanded by a preliminary 2.43% for the entire year of 2022.
The agency reported that overall fourth-quarter exports decreased 8.63% from a year earlier in U.S. dollars due to high worldwide inflation, COVID-19 lockdowns, and subsequently an increase in COVID-19 cases in Taiwan’s top export market, China, as well as generally poorer global demand.
Taiwan’s currency is heavily controlled. As evidenced by the startling difference between Taiwan’s GDP per capita calculated using two distinct methodologies.
More About the Economy of Taiwan
While the Korean Won has nearly reached its ceiling, the Big Mac Index estimates that Taiwan’s currency still has roughly 40% of potential to appreciate. The Korean Won will quickly lose its competitiveness in the market if it rises above that ceiling. Before the bubble burst, Japan experienced this. The Japanese Yen increased significantly, or was “overappreciated.”
According to the IMF WEO Database, Japan’s nominal GDP per person in 2018 was $40,105. According to the same statistics, Japan’s nominal GDP per person in 1995 was $43,441.
Due to its proximity to China, Taiwan will undoubtedly be impacted by Chinese economic policies. Positive reactions would result from a Taiwanese government that is friendly to China. Taiwan’s economy started to experience the effects of China’s embrace of capitalism and the emergence of a market-driven economy. Growing technological innovation and financial sector advancements in China draw more capital and expertise from the west and other parts of Asia.
It’s only a matter of time before China’s production surpasses that of the US; this is a natural phenomenon. Less employment prospects are available in Taiwan as more Taiwanese businesspeople start to migrate to the Mainland. As China is given more attention, Taiwan’s downstream demand will decline. 20 to 30 years ago, Taiwan saw some unfavorable effects from China’s opening, but they were not as severe as they are now. Even under President Chen, there was at least communication between the administrations at that time.
