Export-focused manufacturing drove GDP growth

EXPERIENCES MAY VARY: Manufacturing firms had a great year, the service sector did alright, but other areas limped along, such as the traditional industries sector Export-oriented manufacturing served as the major contributor to Taiwan’s strong GDP growth in the first three quarters of last year, government statistics showed.Taiwan’s GDP grew a substantial 7.15 percent during the nine-month period, with the manufacturing sector contributing 4.89 percentage points, or 68 percent of the total growth, and the service sector contributing 1.76 percentage points, or 24 percent, data from the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed.Department of Statistics head Tsai Yu-tai (蔡鈺泰) said the electronics component and computer/optoelectronics industries benefited from solid global demand for artificial intelligence (AI) applications, making manufacturing the largest contributor to Taiwan’s GDP.In November last year, the DGBAS raised its GDP growth forecast to 7.37 percent for last year and predicted the economy would grow another 3.54 percent this year, citing the continued AI boom.Tsai said the growth of the local manufacturing sector varied from industry to industry. The capital-intensive information and communications industry, and the electronics industry were keen to raise wages in the AI era, but the number of people employed in those industries was relatively low, while the labor-intensive services sector largely saw flat growth, he said.Echoing Tsai, National Central University economist Dachrahn Wu (吳大任) said the strength of the manufacturing sector was uneven, with the old economy sector affected by the US tariff measures.According to Wu, the electronics industry in Taiwan employs only about 1 million people, of the roughly 11 million workers nationwide.At the same time, traditional industries continue to report furloughs. Many employees did not feel significant benefits from the GDP growth in Taiwan and consumer confidence remained weak, he said.In the service sector, the retail and wholesale industry’s contribution to total GDP growth was 0.7 percentage points, and the financial/insurance industry’s share was 0.29 percentage points in the first nine months of last year, DGBAS data showed.Wholesale firms in particular, especially machinery suppliers, benefited from AI business opportunities as their operations were largely correlated to robust exports, Tsai said.He added that the financial/insurance industry was driven by the local stock market in terms of investment returns, as the benchmark TAIEX was boosted by the AI boom last year, soaring 25.73 percent.