Taiwan Economic Forecast

Taiwan Economic Outlook

May 22, 2018

The economy continued to post solid gains in the first quarter—backed by stronger consumption dynamics and a resilient external sector—but nevertheless decelerated modestly from the previous quarter. While household spending gained traction thanks to rising wages, it also contributed to higher imports, which lowered the growth contribution from an otherwise strong export performance. Leading data for Q2 suggests a further, albeit modest, slowdown as global demand moderates. In April, export growth slowed, mainly due to lower demand from mainland China and Hong Kong, and the manufacturing PMI eased to a six-month low. Nevertheless, and despite a likely peak in the tech cycle, the external sector should remain robust in coming months. However, the country remains vulnerable to an escalation of the U.S.-China trade dispute.

Taiwan Economic Growth

Household spending should support the economy this year thanks to higher wage growth. Momentum in exports will, however, likely moderate somewhat. Furthermore, electronic products, Taiwan’s flagship exports, are a key part of the current trade feud between China and the U.S., making Taiwan vulnerable to a degrading trade environment. In addition, the current Taiwanese government’s pro-independence stance has fueled tensions with China, posing further downside risks. China recently ramped up its efforts to attract qualified Taiwanese workers, which could accelerate the outflow of talent the country has been facing for years. FocusEconomics panelists forecast GDP growth of 2.6% this year, which is unchanged from last month’s forecast. GDP growth is seen at 2.3% in 2019.

Taiwan Economy Data

Population (million)23.423.423.523.523.6
GDP per capita (USD)21,89422,71622,54122,585-  
GDP (USD bn)512532530532-  
Economic Growth (GDP, annual variation in %)  
Consumption (annual variation in %)  
Investment (annual variation in %)  
Industrial Production (annual variation in %)0.76.4-1.81.5-  
Retail Sales (annual variation in %)  
Unemployment Rate4.  
Fiscal Balance (% of GDP)-0.8-0.80.1-1.4-  
Public Debt (% of GDP)33.832.831.631.9-  
Money (annual variation in %)  
Inflation Rate (CPI, annual variation in %, eop)  
Inflation Rate (CPI, annual variation in %)0.81.2-0.31.4-  
Inflation (WPI, annual variation in %)-2.4-0.6-8.9-3.0-  
Policy Interest Rate (%)1.881.881.631.38-  
Stock Market (annual variation in %)11.98.1-10.411.0-  
Exchange Rate (vs USD)29.8331.6332.8332.45-  
Exchange Rate (vs USD, aop)29.6830.3131.7632.24-  
Current Account (% of GDP)10.011.614.213.6-  
Current Account Balance (USD bn)51.361.975.272.3-  
Trade Balance (USD billion)33.438.248.149.8-  
Exports (USD billion)311320285280-  
Imports (USD billion)278282237231-  
Exports (annual variation in %)1.62.8-10.9-1.8-  
Imports (annual variation in %)0.21.4-15.8-2.8-  
International Reserves (USD)417419426434-  
External Debt (% of GDP)33.233.430.032.4-  

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Taiwan Facts

Bond Yield1.031.28 %May 21
Exchange Rate29.890.07 %May 21
Stock Market10,9660.37 %May 21

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