Taiwan’s economy slips into recession as Q1 GDP goes negative

You must have seen hundreds of reports here and there about the fact that there is a huge threat of Chinese invasion on Taiwan and also about the support from US but it is worth noting that there is still time to discuss all that. However, the fact that no one is discussing about the economy of Taiwan is a huge concern as well and it could well be a brownie point for China as well. It is worth noting that the latest GDP numbers of Taiwan have been published for the first quarter of 2023 and it must be said that the numbers don’t look good at all.

If you know what recession means, you will understand from the numbers but for those who don’t, it is worth noting that when the GDP of a country goes negative then it is officially declared as entering recession. Taiwan’s GDP for Q1 2023 was in negative,  -3.02% y/y vs Q4 -0.41%, to be precise. This means that it already was in a troubled state last quarter but is now in a very difficult phase now. Wu Pei-Hsuan told reporters that “The first-quarter GDP was the worst since the financial crisis,” and added that “This quarter’s external demand was weak, but private consumption was strong.”

It is worth noting that Taiwan’s economy is hugely dependent on exports as well as its tech sector such as chip manufacturing but the global demand has slowed down due to other factors which means that the economy contracted more than expected. In contrast, China’s economy grew by 4.5% in the first quarter of this year which was thanks to the lifting of Covid curbs in the country.

Taiwanese Government expects the downturn of exports to continue at least till the end of this year and it is for that reason the government has decreased its growth rate for the year from 2.75% to just above 2% now. The Government hopes that the revised growth rate target can be achieved despite the current economic conditions. Taiwan’s economy minister told reporters that “obvious signs of recovery” were not visible but added that everyone hopes things will get better in the second half of this year.