Taiwan’s Economic Recovery Uneven
The Directorate-General of Budgeting, Accounting and Statistics (DGBAS) in early August revised its 2021 GDP growth forecast to 5.88%, up 0.42 percentage points from the one it made in June, as sustained global demand caused July exports to reach a record US$37.95 billion. Imports in July grew by 41% year-on-year to US$32.05 billion, bringing Taiwan’s overall trade surplus that month to US$5.9 billion. Export orders, a leading economic indicator, rose for the 17th consecutive month in July, hitting an historic US$55.3 billion.
Yet the growth predicted by the DGBAS will likely not be evenly distributed, as the domestic services industry – particularly the leisure, travel, and arts and entertainment sectors – have been hit hard by the more than three months of heightened pandemic restrictions in Taiwan. Restauranteurs and other food-related businesses have also taken the brunt of the impact, with food and beverage sales plummeting around 40% year-on-year in June and falling again in July by 38.8% from the same month in 2020.
Meanwhile, retail sales revenue in July fell by 10.3% year-on-year, an improvement from the more than 13% drop in June, likely attributable to the government’s decision to gradually relax restrictions on public life. Taiwan also lost 93,000 jobs in June, the DGBAS reported, a record 1.14% month-on-month decline. Of the jobs lost, 11,000 were in the retail and wholesale sector, while an even larger 17,000 job losses occurred at art, entertainment, and recreational facilities.
The Consumer Price Index in July increased by 1.95% from the same month a year earlier, with the core inflation rate (excluding energy and food prices) increasing by 1.29%. In addition, the Wholesale Price Index jumped by 11.77% year-on-year, the fourth consecutive month of growth.