Taiwan Economic Forecast

Taiwan Economic Outlook

July 16, 2019

After a feeble first quarter, the economy seems to have remained dejected in Q2 as low export demand and the U.S.-China trade war continued to batter Taiwan’s critical tech sector. The manufacturing PMI fell to a seven-year low in June. While exports rebounded marginally in June after seven months of decline, export orders in May suggest demand will remain sluggish heading into Q3. Nevertheless, there are tentative signs the economy might gain steam in H2: The export order contraction softened in April–May; export performance in key markets is rebounding; and soaring machinery imports in June suggest a ramp-up in fixed investment. Moreover, the recent delay of U.S. tariffs on Chinese tech products could support business confidence. In other news, on 9 July the U.S. approved a USD 2.2 billion arms sale to Taiwan, drawing protests from China and fanning cross-strait tensions ahead of next year’s general elections.

Taiwan Economic Growth

Growth looks set to slow this year due to the trade war and lower tech demand. While the possible imposition of U.S. tariffs on Chinese tech imports remains a key downside risk, Taiwan could benefit from global firms relocating production to the island. Moreover, public infrastructure investment, low unemployment and inflation should support domestic demand. FocusEconomics panelists forecast GDP growth of 1.9% in 2019, which is down 0.1 percentage points from last month’s forecast, and 2.0% in 2020.

Taiwan Economy Data

Population (million)23.423.423.523.523.6
GDP per capita (USD)21,89422,71622,55922,66124,480
GDP (USD bn)512532530533577
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)3.26.4-
Retail Sales (annual variation in %)0.82.8-
Unemployment Rate4.
Fiscal Balance (% of GDP)-1.4-0.80.1-0.3-0.1
Public Debt (% of GDP)39.037.836.636.235.5
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)0.81.2-
Inflation (WPI, annual variation in %)-2.4-0.6-8.9-3.00.9
Policy Interest Rate (%)1.881.881.631.381.38
Stock Market (annual variation in %)11.98.1-10.411.015.0
Exchange Rate (vs USD)29.8331.6332.8332.4529.67
Exchange Rate (vs USD, aop)29.6830.3131.7632.2430.42
Current Account (% of GDP)9.711.414.113.414.5
Current Account Balance (USD bn)49.960.474.871.683.5
Trade Balance (USD billion)33.438.248.149.858.0
Exports (USD billion)311320285280317
Imports (USD billion)278282237231259
Exports (annual variation in %)1.62.8-10.9-1.813.2
Imports (annual variation in %)0.21.4-15.8-2.812.4
International Reserves (USD)417419426434452
External Debt (% of GDP)33.233.430.032.331.5

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Taiwan Facts

Bond Yield0.661.28 %Jul 11
Exchange Rate31.030.07 %Jul 11
Stock Market10,8430.37 %Jul 11

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