Taiwan Economic Forecast

Taiwan Economic Outlook

January 25, 2022

After fairly mild growth in Q3, underlying momentum appeared to improve substantially in Q4, as suggested by a notable rise in the non-manufacturing PMI. In particular, the combination of tumbling unemployment, the vaccine rollout and the government’s stimulus voucher scheme seemed to spur private consumption, with retail sales surging in October and November. That said, the industrial sector appeared to lose some momentum amid supply difficulties, with the manufacturing PMI averaging lower than in Q3. Turning to the new year, the recent extension of the government’s “Invest in Taiwan” initiative, which provides support for firms who relocate production to the island, bodes well for capital spending: The initiative has reportedly attracted applications worth over USD 50 billion since it began in July 2019. However, an uptick in Covid-19 cases risks a snap-back of restrictions.

Taiwan Economic Growth

The economy is set to lose some steam in 2022 but remain fairly upbeat nonetheless. Private spending should be bolstered by a higher minimum wage, the public salary hike and a tighter labor market, while the semiconductor sector should stay strong. Ongoing tensions with China and possible new Covid-19 flare-ups pose important downside risks. Our panelists see GDP growing 3.3% in 2022, which is unchanged from last month’s forecast, and 3.0% in 2023.

Taiwan Economy Data

2015 2016 2017 2018 2019
Population (million)23.523.523.623.623.6
GDP per capita (USD)22,94123,16125,15425,75025,893
GDP (USD bn)539545593607611
Economic Growth (GDP, annual variation in %)1.52.23.32.82.7
Consumption (annual variation in %)2.92.62.72.02.2
Investment (annual variation in %)2.73.4-0.33.09.1
Industrial Production (annual variation in %)-1.32.05.03.6-0.3
Retail Sales (annual variation in %)-1.01.10.92.23.1
Unemployment Rate3.83.93.83.73.7
Fiscal Balance (% of GDP)0.1-0.3-0.10.0-  
Public Debt (% of GDP)36.636.235.535.1-  
Money (annual variation in %)5.83.63.62.74.5
Inflation Rate (CPI, annual variation in %, eop)0.11.71.2-0.11.1
Inflation Rate (CPI, annual variation in %)-0.31.40.61.40.6
Inflation (WPI, annual variation in %)-8.9-3.00.93.6-2.3
Policy Interest Rate (%)1.631.381.381.381.38
Stock Market (annual variation in %)-10.411.015.0-8.623.3
Exchange Rate (vs USD)32.8332.4529.6730.5829.91
Exchange Rate (vs USD, aop)31.7632.2430.4230.1530.90
Current Account (% of GDP)13.513.114.011.710.6
Current Account Balance (USD bn)72.871.383.170.865.1
Trade Balance (USD billion)48.150.058.349.243.5
Exports (USD billion)284279315334329
Imports (USD billion)236229257285286
Exports (annual variation in %)-11.0-1.813.05.9-1.4
Imports (annual variation in %)-15.9-3.012.210.70.3
International Reserves (USD)426434452462478
External Debt (% of GDP)29.531.630.731.530.2

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Taiwan Facts

Value Change Date
Bond Yield0.691.28 %Dec 31
Exchange Rate29.910.07 %Jan 01

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