Preliminary data on Taiwan's economy shows a 2.06 percent growth in Q3, beating the August forecast of 1.99 percent. The better-than-expected result was driven by a more robust private spending and capital formation, the Directorate General of Budget, Accounting, and Statistics (DGBAS) said in a report published on Friday. 

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This is the highest quarterly growth since the first quarter of 2015, which recorded a 4.04 percent growth. Q3 also surged from the previous quarter's 0.70 percent, while Q4 is expected to climb by a modest 2.38 percent. 

The solid data are pointing to the forecasted one percent annual growth rate this year, but Huang Wei-chieh, a specialist at the DGBAS, said that it could even grow by 1.24 percent if Q4 forecasts follow through.

By the numbers

Private consumption climbed by 2.37 percent from the previous year, contributing 1.24 percent to the Q3 growth. Previous forecast was at 1.54 percent. Retail sales made a comeback after waning in the first two quarters of the year, while sales in the automotive industry increased by 6.83 percent. Public spending on food and beverage also rose. 

Airline carriers added more aircrafts to their fleets and the semiconductor industry invested in high-end technology processes during the July to September period, raising local investments by 3.24 percent and besting the predicted 2.79 percent increase. 

Exports underperformed in Q3, only recording a 3.57 percent hike compared to a forecasted 4.50 percent. This is the biggest factor that can drag down the target annual economic growth as Taiwan has a mainly export-driven economy. DGBAS attributes the decline in exports to the decreased number of business days due to work suspensions during the typhoon season. 

Taiwan is a global powerhouse in manufacturing electrical parts. Exports to mainland China, the world's biggest smartphone market, grew by 4.3 percent. Demand in the region for affordable phones also had Taiwanese companies beefing up their exports of phone components, especially with the release of the iPhone 7, which received positive feedback in Taiwan. 

However, it is unclear if the strong demand for the iPhone 7 will sustain the 3 percent growth in exports until the fourth quarter. 

Imports of merchandise and services increased by 5.14 percent, topping the forecasted 4.48 percent growth. Import of capital equipment largely contributed, the DGBAS said. 

In seasonally adjusted annualized rate (SAAR), Taiwan's economy during Q3 grew by 4.54 percent, a big leap from Q2's 0.23 percent. 

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