Taiwan fourth quarter growth tops forecasts, but tech exports outlook unclear

Taiwan reported its fastest quarterly growth in nearly three years in October-December, but the new year starts with questions about whether the strong tech exports that fuelled 2017 expansion can be sustained. The island's fortunes brightened last year due to the roll-out of new smartphone models of Apple Inc's iPhone and other tech gadgets.
Gross domestic product (GDP) expanded 3.28 percent in the October-December period from a year earlier, preliminary data showed on Wednesday. The final data for the quarter will be released on February 13. The fourth-quarter result beat the Reuters poll forecast of 2.50 percent forecast, and was the fastest since the first three months of 2015 and gave Taiwan its seventh straight quarter of growth.
For full-year 2017, growth clocked 2.84 percent, the statistics agency said. This beat the government's upwardly revised forecast of 2.58 percent and was the best annual rate since 2014. In 2016, the economy expanded 1.41 percent. The growth announced on Wednesday "is likely as good as it gets for the economy," said Chang Liu of Capital Economics. "We expect growth to slow over the quarters ahead, averaging about 2.5 percent this year."
In the fourth quarter, Taiwan benefited from "increased strength in the global economic recovery, as well as the flourishing semiconductor market situation and strong demand for machinery," the statistics agency said. It said that exports increased 10.49 percent in the fourth quarter from a year earlier. In December, they hit a record high, volume-wise.
Earlier this month, the government said 2017 export orders by value reached a record $492.81 billion, 10.9 percent more than the 2016 total. While analysts in recent months have suggested that the economic momentum generated by tech gadgets would extend into 2018 as exports rose through the holiday season, some concerns have surfaced.
On Monday, Nikkei reported that Apple Inc will halve its iPhone X production target for the first three months of the year to around 20 million units. That hit shares of Apple and of Taiwan suppliers including chipmaker Taiwan Semiconductor Manufacturing Co and electronics manufacturer Hon Hai Precision Industry Co.
Carl Liu, an analyst at KGI Investment Advisory in Taipei, said the fourth quarter growth rate "beat our expectations by a lot, the main reason is the contribution of strong exports." But if there is a delay or drop in Apple shipments from Asia, that "could have a negative effect on the first quarter's GDP", he said.