Taiwan's Fourth-Quarter Growth Slows

By Fanny Liu 

TAIPEI--Taiwan's economy expanded more slowly in the fourth quarter, as falling oil prices hurt petrochemical exports, though demand for electronics remained strong.

Taiwan's gross domestic product rose 3.17% from a year earlier in the final quarter of 2014, the lowest rate in five quarters, and 1.17% from the previous quarter, an initial official reading showed Friday.

Growth exceeded the government's previous estimate of 2.83% on year, but was largely in line with the median 3.08% increase forecast by 11 economists in a survey by The Wall Street Journal. The economy expanded 3.63% in the third quarter of 2014.

Exports edged up 0.5% in the fourth quarter from a year earlier, weakening from a 6.7% rise in the third quarter, as overseas sales shrank for petrochemical products, which comprise a fifth of total exports. Electronics exports, however, recorded double-digit growth through the peak shipping season, as many Taiwanese manufacturers supply components for popular gadgets such as Apple Inc.'s new iPhones and China's Xiaomi smartphones.

The export-driven economy faces headwinds as the eurozone slows and demand cools in China, Taiwan's biggest trading partner--despite the recent uptick in U.S. demand. In light of weak demand abroad, economists say Taiwan's monetary policy will likely remain accommodative. The central bank is also likely to allow the local currency to depreciate more against the U.S. dollar to boost the competitiveness of its exports, they say.

An improving job market also lifted Taiwan's private consumption by 2.33% in the fourth quarter, following a 2.92% rise in the third quarter. The government said the gain was capped by rising costs of eating out and a drop in sales at restaurants after an adulterated cooking-oil scandal broke in early September.

In the fourth quarter, capital formation, which includes government and private-sector investment in fixed assets and changes in inventories, gained 2.19% from a year earlier, much slower than a 7.97% rise in the third quarter.

Write to Fanny Liu at fanny, [e-mail]

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