By Fanny Liu and Eva Dou
TAIPEI--Taiwan's economy gathered pace in the second quarter, as
electronics exports rose, companies stepped up investments and
consumers continued to spend.
In the three months ended June 30, Taiwan's gross domestic
product rose 3.9% from the same period a year earlier and was up
1.5% from the previous quarter, a preliminary estimate released by
the Directorate General of Budget, Accounting and Statistics showed
on Thursday.
The year-over-year expansion was above the government's forecast
of 2.8%. It was also higher than the median 3.1% increase forecast
by 10 economists in a survey by The Wall Street Journal, and
stronger than the 3.1% expansion in the previous quarter.
Taiwanese manufacturers are supplying key components such as
microprocessors and camera lenses to global electronics brands,
including Apple Inc. As tech titans are preparing for new product
releases and more tourists visit Taiwan, the island's exports rose
2.9% in the second quarter. Exports gained less than 1% in the
first quarter.
As prospects in exports brightened, capital formation--which
includes government and private-sector investment in fixed assets
and changes in inventories--rose 6.9% in the second quarter from a
year earlier, after contracting 0.5% in the first quarter.
Lifted by a rising stock market and an increase in jobs, private
consumption grew 2.6% year-to-year in the second quarter, compared
with a 2.7% rise in the first quarter.
As the latest iPhones and other electronic devices are slated
for launch in the second half, and companies are upgrading their
computers after Microsoft Corp. phased out its aging operating
system, manufacturers and economists expect exports to rise even
more quickly in the third and fourth quarter.
But some economists said that as Taiwan's exports are more tied
to gadget releases now, the overall economy could slow again if
electronic demand ebbs.
"Taiwan's comprehensive and competitive supply chain of
smartphones and tablets will continue to boost exports at least
through the first half of 2015," said Standard Chartered economist
Tony Phoo.
Barclays Research economist Waiho Leong said the data shows
growth momentum is gaining and that Taiwan is benefiting from an
improving investment appetite in the U.S. "That means it is
benefiting from more handset launches as well as stronger orders
for information technology equipment," Mr. Leong said.
Economic recoveries in the U.S. and China, Taiwan's two biggest
export markets, are gathering steam, boding well for Taiwan's
exports. The U.S. economy rebounded in the second quarter and the
jobless rate declined further, although inflation remained low.
China's growth also accelerated slightly in the second quarter.
Taiwan's export orders, an early indicator of actual exports,
were at their strongest in 17 months in June. Industrial production
in June was up 8.6% on year, above expectations, led by
double-digit gains in semiconductor output, which some analysts put
down to increased Taiwanese supply to Apple. The island's
manufacturing activity, measured by purchasing managers' indexes,
has been expanding steadily.
The government had earlier forecast the export-dependent economy
to expand 3% this year, the best in three years--but still way
below the plus-5% expansions it regularly logged before the global
financial crisis.
Largan Precision Co., which supplies camera lenses for iPhones
and other smartphones, told investors earlier this month that
business would continue to grow on the back of approaching product
launches. "Orders were better in July than in June, and August will
be better still," the company's chief executive, Adam Lin,
said.
At Delta Electronics, another iPhone component supplier,
chairman Yancey Hai said several factors pointed to a brighter
second half than last year. "We have high hopes for the smartphone
business. Our PC business should also be better than last year
because Microsoft's discontinuation of support for Windows XP will
encourage purchases of new computers," Mr. Hai added.
The island's large personal-computer manufacturing industry is
also stabilizing, after steep contraction in the sector weighed on
the Taiwan economy in the past two years.
Write to Eva Dou at eva.dou@wsj.com