Solid demand for tech gadgets such as Apple's new iPhone underpin Taiwan's GDP growth in Q3.
TAIPEI: Taiwan's economy grew at its fastest pace in more than a year in the third quarter, thanks to solid demand for tech gadgets such as Apple's new iPhone and improved consumption at home, backing bets the central bank will keep rates on hold in the near-term.
The result marked the latest evidence of a gradual recovery in the export-driven economy, with global demand taking off as retailers stocked up ahead of the year-end holiday shopping spree.
Taiwan's gross domestic product growth accelerated to 2.06 percent in the third quarter on-year, almost three times the 0.7 percent growth clocked in the second quarter, preliminary data from the Directorate General of Budget, Accounting and Statistics showed on Friday.
"Though global economic growth remains slow... (Taiwan's) exports gained momentum from stronger semiconductor demand and launches of handheld devices," it said in a statement. "Consumption and investments at home were better than forecast."
A Reuters poll had forecast the economy to have expanded 1.8 percent in the third quarter on-year.
On a seasonally adjusted annualized rate (SAAR) basis, the economy grew 4.54 in the July-September period, well ahead of the 0.23 percent in the second quarter.
Some analysts said it was too early to call a turn in global demand, but noted the trends pointed to an improvement.
"The effect of iPhone 7 should be short term, so we still need to see if global tech demand will sustain next year," said Tony Phoo, senior economist of Standard Chartered Bank in Taipei.
Taiwan's central bank left its key policy rate unchanged in September, after slashing borrowing costs over four straight meetings, and called for more structural reforms to keep growth on track.
Phoo said "there is no urgency" for the central bank to cut rates as it assesses data and global demand, adding that Britain's vote to exit the European Union remains a risk factor.
RECOVERY SIGNS
Taiwan is a major Asian production house for global tech names such as Apple Inc, making components for smartphones, notebook PCs and other gadgets.
The global slowdown of the past two years or so, led by a cooling in major trading partner China, had depressed growth in the island.
However, signs of a recovery have started to emerge. Taiwan's export orders - a leading indicator for Asia's exports and a pointer to shipment activity two to three months ahead - rose sharply more than expected in September as vendors rushed to stock up on supplies for Apple's iPhone 7 and other tech gadgets to meet year-end demand..
That surprise came on the heels of an unexpected 8.3 percent jump in August - its first gain in 17 months.
The government in August raised its 2016 full-year economic growth forecast to 1.22 pct from 1.06 percent, after earlier slashing forecasts for the year three times, hoping demand from China and its other major markets would pick up.
"At this point, we are cautiously optimistic... We don't see deterioration of Chinese economic growth outlook," Standard Chartered's Phoo said. - Reuters
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