The Taiwanese Economy: Doubly favored

A resilient external sector and a successful handling of the Covid-19 pandemic led Taiwan’s economy to grow robustly last year, outpacing mainland China for the first time in 30 years. In 2021, growth is set to accelerate further, supported by rebounding private consumption and red hot foreign demand for Taiwanese goods and services. 

 

Although a rise in Covid-19 cases led to strict lockdowns in Q2, the outbreak was handled swiftly and daily new cases are back to single digits. Easing restrictions, coupled with hefty stimulus measures revealed in September—consisting of household coupons—should see private spending increase steadily in H2 2021 and into early 2022. Furthermore, as a global leader of the semiconductor industry, Taiwan’s external sector has reaped the benefits of the ongoing chip shortage and its current account to GDP ratio is seen hitting a record level in 2021.

Despite ongoing tensions with China and the spread of the Delta variant around the region, the current dreamland conditions supporting Taiwan’s economy should continue for the remainder of this year and into 2022. FocusEconomics Consensus Forecast panelists expect GDP growth to reach 5.9% in 2021, before slowing to 3.1% in 2022. Moreover, our panel of analysts see the current account balance reaching 14.6% of GDP in 2021 and 14.3% in 2022.  

Insights from Our Analyst Network

Commenting on the outlook for Taiwan’s economy, analysts at the EIU noted:
 
“Even as pandemic-related disruption fades, we expect Covid-19 to accelerate global plans for technological upgrade among both corporates and governments in 2022–25. This will preserve demand for Taiwanese technology goods over that period, although real GDP growth will soften from 2022 as electronics demand tied to the pandemic normalizes, production overcapacity from chip investment worsens and as trade shocks tied to US-China tensions intensify.” 


Moreover, reflecting on the current trend and short-term outlook for exports, analysts at Goldman Sachs said:  

“Taiwan exports sustained expansion notwithstanding spikes in Delta variants in its major trade partners. While the gains moderated in August on a decline in electronic component exports, non-tech exports gained broadly and robust imports, especially acceleration in capital goods imports, indicate that manufacturers remained optimistic about demand. Higher prices of non-memory chips, where Taiwan companies have dominant positions, will likely support Taiwan exports further in the near term.”

Our Latest Analysis

  • How has the pandemic affected global trade? What is the global trade outlook going forward? Find out in our latest special report.
  • The Hungarian Central Bank raised rates again in September, marking the fourth consecutive hike. Our economist Massimo Bassetti has the latest.
  • New Zealand’s economy gained some momentum in the second quarter. Our economist Massimo Bassetti shares the details. 

 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.

Author: Steven Burke, Economist

Date: September 23, 2021

Featured Posts

Tags

CIS Countries Consensus Forecast TPS Sub-Saharan Africa Nigeria South Africa Brexit France Draghi Turkey Cryptocurrency Government Bond Forex oil prices Eurozone UK Colombia scotiabank Base Metals Commodities Palladium Latin America Spain chile Economic Growth (GDP) Economists Asian Financial Crisis Copper Brazil Resource Curse Unemployment rate TPI Mexico Economic Crisis Asean Argentina Infographic G7 China Israel Healthcare Commodities ECB India centralbanks OPEC Agricultural Commodities Cannabis Iran precious metals Company News Eastern Europe Central America Germany Banking Sector United States Fed election Economic Outlook Budget deficit Inflation Exchange Rate Trade Investment Vietnam Exports Africa Greece Italy Asia Ukraine Nordic Economies Emerging Markets Base Metals Major Economies interview Costa Rica; GDP; Budget digitalcurrencies Political Risk USA Economic Debt Energy Commodities Portugal Housing Market Venezuela economic growth GDP Bitcoin IMF TPP Oil MENA Gold Tunisia Euro Area Australia Russia Canada Canadian Economy Lagarde United Kingdom Japan European Union Interest rate Sterlin Precious Metals Commodities public debt

Twitter @FocusEconomics

  • Quickly and easily compare the latest forecasts for more than 200 economies and over 30 commodities prices across a… https://t.co/v3NF2fHdzJ

    19 hours ago

  • The UK has been buffered in recent days by a tumbling pound and spiking bond yields. In our latest insight piece, w… https://t.co/XhK7bhkxsB

    1 day ago

  • Global inflation will be at a multi-decade high this year, although forecasts vary wildly from country to country,… https://t.co/PjV4g9LvO4

    1 day ago

  • Elevated commodity prices, supply constraints and tight labor markets have spurred global inflation to its current… https://t.co/Bbhrm8gUpJ

    4 days ago

  • Our analysts' forecasts for average 2022 Euro area inflation have risen uninterruptedly so far this year, and now s… https://t.co/0eTYsBY7V9

    4 days ago

Blog archive

Search form