Talking Points
- Taiwan’s growth expanded at its fastest pace for nearly two years in the last quarter of 2016
- However, it still managed to miss forecasts
- Currency markets chose to accentuate the positives, with gains for the Taiwanese Dollar
China proxy Taiwan’s economy scored its strongest rate of growth since early 2015 in the final quarter of last year but managed to miss forecasts in the process on Wednesday.
All the same, the Taiwanese Dollar seemed to enjoy the release and crept higher against its US cousin after it.
Gross Domestic Product grew 2.58% in the last three months of 2016 compared to the same period a year earlier according to preliminary official figures. That would be the strongest annual pace since the first quarter of 2015, when the economy grew by 4.01%, but still below the 3% level which markets had been expecting.
The economy expanded by 1.4% for the full year of 2016, which was below the 1.5% that markets had been looking for. Taiwan has been wrestling for some time with comparatively sluggish growth and stagnant wages, along with a protracted exodus of local companies to mainland China. Hopes of a regional financial sector to rival Singapore have also foundered.
But it seems that relative export strength endures. Of course, the ascendency of Donald Trump has raised the spectre of a more protectionist world, a trend which China and all Asia’s major exporters will want to fight as hard as they can.
Still, investors took a reasonably optimistic view of Wednesday’s data. The Taiwanese Dollar gained on the greenback in the wake of the numbers. USD/TWD slipped to 31.30 after their release, from 31.39 just before hand.
Creeping higher: TWD
Chart compiled using TradingView
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
