Taiwan GDP growth misses analyst targets

Taiwan's economy grew at a slower pace than expected last quarter as concern over food safety damped spending at restaurants.

Gross domestic product rose 3.78 percent from a year earlier in the three months to September, according to the statistics bureau's preliminary data released on Friday, compared with the median 3.9 percent estimate in a Bloomberg survey of economists and 3.74 percent growth in the previous period.

The discovery of tainted oil in local food has prompted firms from Taiwan, including Wei Chuan Foods Corp, to recall products and Japan and the mainland to ban food imports from the island.

While consumption weakened, export growth quickened in the last three months as the release of the iPhone boosted production at local corporates such as Hon Hai Precision Industry Co, a supplier for Apple Inc.

"Problems such as food safety have caused consumption to be weaker than expected," said Forest Chen, an economist at Ta Chong Bank Ltd. "It's quite risky to rely on Apple products to drive the economy."

Sales in the restaurant industry slowed in the third quarter because of food safety concerns in September, the statistics bureau said in a statement.

Exports were better than expected, with shipments of electronics, machinery and basic metals continuing to grow, it said.

Taiwan's economy is predicted to expand 3.6 percent this year, the fastest pace since 2011, according to the median estimate in a Bloomberg survey of analysts.

The local dollar has depreciated in the past three months against the US dollar on speculation the Federal Reserve is on track to raise interest rates next year, sapping demand for emerging-market assets.

The central bank has kept its benchmark rate at 1.875 percent since mid-2011.

The statistics bureau will compile GDP data based on the United Nations' System of National Accounts starting from the final third-quarter figures to be released in November, it said in an earlier statement. The new method will reclassify research and development expenditures as fixed investments and use the chain method to calculate real GDP.