Advance estimates for Taiwan GDP show the economy contracted for the second consecutive quarter in the three months to March and at a more pronounced rate. GDP fell 1.63 percent on the quarter after dropping 0.37 percent in the three months to December, with year-over-year growth also weakening from a decline of 0.41 percent to a fall of 3.02 percent. Industrial production and PMI survey data also showed an ongoing contraction in the manufacturing sector over this period.

The year-over-year decline in GDP in the three months to March was largely driven by weaker external demand, with exports dropping 10.86 percent after a fall of 5.14 percent previously. Investment spending also fell at a sharper pace, while growth in government spending slowed. This was partly offset by stronger growth in consumer spending.

Taiwan's central bank increased its main policy rate by 12.5 basis points from 1.75 percent to 1.875 percent at its quarterly policy meeting held mid-March. Today's data are in line with officials' assessment that growth will be weak in the first half of 2023, but they expect conditions to improve later in the year in response to fiscal measures and a recovery in external demand.

GDP data are a comprehensive measure of Taiwan’s overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in Taiwan within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only.

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the Taiwan economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.