Private Consumption Weaknesses Retard Growth

Economic growth in Taiwan is being held back by weak private consumption...

Nationally, GDP was 4.93 percent during the first quarter, lower than the 5.06 percent estimated in February by the government's statistical agency. The first-quarter figure of 4.93 percent growth also compares to a 6.4-percent expansion registered during the final quarter of last year, the fastest pace for six quarters, according to DGBAS figures."Private consumption is much more sluggish than we expected, primarily because of a sharp drop in automobile sales," Hsu said. According to statistics compiled by the Ministry of Transportation and Communications, sales of new cars in Taiwan dropped by nearly 25 percent in the first quarter from the same period a year ago. Private consumption, which makes up about two-thirds of Taiwan's total GDP figure, only increased by 2.07 percent instead of the 2.97 percent projected by the government. But, the exports of goods and services grew at a faster-than-expected annual rate at 14.1 percent during the first three months, compared to the earlier estimates of 12.1 percent, Hsu said without giving detailed figures. Manufacturing production, the biggest component of industrial output, also increased rapidly, rising 8.21 percent from a year ago, he said. But, rocketing crude oil prices and high levels of credit and cash-card debt, which were partly blamed for sluggish personal consumption during the first three months, were concerns, Hsu said.

In a country where people pay have historically paid something like 20% a month for informal loans on the underground financial market, it was totally forseeable that credit card debt would be a problem.

[Taiwan]