Even as the recent Chinese incursions in Taiwan’s air defence system continue to push the country down, fate seems to be pushing the island nation on a sort of a high.
As the Chinese economy continues to shrink in the aftermath of the Covid pandemic outbreak, Taiwan’s economy grew last year at its fastest pace in more than a decade, driven by strong tech exports to support people working and studying from home, as well as demand for chips and recovering consumer confidence.
For 2021, initial gross domestic product (GDP) growth was put at 6.28%, compared with 3.11% the previous year, preliminary data from the statistics agency showed on Thursday.
The new economic numbers were announced a day after China deployed J-16D jets into Taiwan’s air defence zone and Chinese high-tech warplanes continued to hover over Taipei.
Meanwhile, the current economy numbers are the fastest since an expansion of 10.25% in 2010. GDP grew a preliminary 4.88% in the fourth quarter of 2021 from a year earlier after a rise of 3.7% in the period from July to September. That was well above the increase of 3.8% forecast.
However, it lagged the growth of 7.43% in the second quarter and 8.92% in the first quarter. As a key hub in the global technology supply chain for giants such as Apple Inc, Taiwan’s economy has outperformed many regional peers during the pandemic as it benefited from robust demand for tech exports as more people turned to working and studying from home.
A global shortage of semiconductors has also filled Taiwan chip makers’ order books and driven them to expand production at home. Taiwan’s exports rose 29.4% in 2021 to a record high, and the economy continues to benefit from strong global demand for its high-tech goods and chips.
Total fourth-quarter exports soared 26.01% on the year in U.S. dollar terms, the agency said. Statistics official Wu Pei-Hsuan said domestic consumption had recovered in the fourth quarter after being affected by government controls to curb a short-lived domestic COVID-19 outbreak that began in May.
However, Capital Economics said exports were unlikely to grow at such a rapid pace this year. “With high inflation and fading fiscal support dragging on retail spending in many key exports markets, we expect exports to level off this year,” it said in a note.
Another risk is a slowdown in the economy of China, Taiwan’s top trading partner. China’s economy grew 8.1% in 2021 and 4.0% in the final quarter, faster than expected but still at its weakest pace since the second quarter of 2020, off the back of weak consumption and a property downturn.
Taiwan will release on Feb. 24 its revised GDP figures, including growth estimates for the full year.