The Taiwanese Economy: Doubly favored

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.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest