Taiwan's economy grew at a solid pace in the third quarter on an annualised basis, as domestic demand and exports picked up, backing views the central bank will start lifting rates as early as in the first quarter of next year.
Gross domestic product rose 8.25 percent in the July-September period on a seasonally adjusted, annualised basis, after jumping 18.78 percent in the previous quarter, data showed on Thursday. The government revised up its growth forecast for 2010 on a stronger outlook for its main export sector.
"Very strong numbers, surprisingly strong," said Frederic Neumann, Asia Pacific economist at HSBC in Hong Kong. "This gives further upside for the fourth quarter, and also lends credence to our view that the Taiwan's central bank would be one of the first in he region to hike rates in the first quarter next year."
The central bank has kept interest rates at a record low of 1.25 percent, hoping it will help private investment and domestic consumption. A slew of robust numbers in the past week, including improving export orders, a rebound in industrial output in October, have led some to bring forward the timing of a rate hike to early 2010. Analysts in a Reuters poll last month had expected rates to be lifted in the third quarter of next year. Rebounding consumer confidence and growing signs the labour market was unlikely to shed more jobs have also added to the optimism.
On an unadjusted basis, GDP shrank 1.29 percent in the September quarter from a year earlier, its slowest annual pace of decline this year and the economy looked set to rebound to growth in the fourth quarter and 2010. Analysts in a Reuters poll had forecast a 2.6 percent contraction. Other Asia economies that have reported third-quarter data have also seen their recovery continue from the previous quarter, with China leading the charge, helped by its massive $585 billion fiscal stimulus programme.
Solid demand from China helped Taiwan's exports orders rise for the first time in 13 months in October, suggesting demand for Asian exports was keeping a healthy pace and would help economic growth in the region in the fourth quarter.
In the third quarter, external demand contributed to 2.83 percentage points to Taiwan's 8.25 percent annualised growth and domestic consumption made up the rest of the 5.42 percentage points, government data showed.
For the full year, Taiwan's economy is now expected to contract 2.53 percent, its worst performance on record but better than its August forecast for a 4.04 percent fall, the statistics agency said. The government said it expected the economy to expand at 4.39 percent in 2010 and said exports are likely to rise 15.36 percent next year as demand for the nation's technology products pick up. It had previously forecast GDP growth of 3.92 percent.
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