Has Taiwan’s economy slipped into a technical recession?

It seems likely as QoQ GDP growth may have remained marginally negative for the second consecutive quarter, says DBS.

DBS has penciled in growth of 2.8% YoY (about zero in QoQ terms) for the final quarter of last year, compared to 3.4% YoY (-0.6% QoQ saar) in 3Q11. The market consensus is also looking for 2.8% YoY.

Here’s more from DBS:

However, judging from the weaker-than-expected monthly data published in recent days, the downside risks to the consensus and our forecast for 4Q GDP have increased. There is a greater than 50% probability that the QoQ GDP growth has remained marginally negative for the second consecutive quarter, which means the economy has slipped into a technical recession. 

Exports and investment have both contracted further in 4Q11, due to the deterioration of global economic conditions. Private consumption growth has also begun to decelerate, as a result of the sluggish stock market performance and the weakening outlook for employment/income.

Going forward, we expect the QoQ GDP growth to return to the positive territory in 1Q12. Export orders, as a leading indicator, have started to pick up on the MoM basis since Oct11 and maintained the modest recovery for three consecutive months. A sequential rise in the coincident indicators like exports and industrial production is expected to emerge in 1Q.

Nonetheless, a substantial recovery would only arrive in 2Q at the earliest. The external uncertainties related to European debt crisis still linger. Meanwhile, the YoY economic numbers that get public attention will remain disappointing in 1Q. From the technical perspective, even if the sequential trend in export demand continues to normalize, the YoY growth in exports, industrial production and GDP will drop further in 1Q before rebounding in 2Q.