Taiwan Economic Forecast

Taiwan Economic Outlook

November 17, 2020

The economy rebounded strongly in the third quarter, contrasting the marginal contraction in the second quarter and marking the best result in two years. The turnaround was spearheaded by firmer exports growth, chiefly thanks to soaring demand for Taiwanese electronic goods from China and the U.S. On the domestic front, consumer demand showed signs of recovery in Q3, contracting at a much softer pace than in Q2. On top of that, government spending bounced back in the quarter, solidifying the overall economic recovery in turn. Turning to Q4, available data suggests sustained momentum at the tail end of the year. In October, the manufacturing PMI remained virtually unchanged at September’s 30-month high, which, coupled with an uptick in business confidence, points to solid private sector activity growth at the outset of the quarter. Moreover, sustained forward-looking export order growth in September signals upbeat external sector conditions in Q4.

Taiwan Economic Growth

Growth should pick up steam next year, as the constraining effects of the pandemic gradually wear off. Upbeat foreign demand for merchandise goods will support the external sector, while recovering consumer demand is set to boost domestic activity. Uncertainty over the timing of a Covid-19 vaccine and geopolitical tensions with China cloud the outlook, however. Our panelists see GDP growing 3.4% in 2021, which is up 0.3 percentage points from last month’s estimate, and 2.6% in 2021.

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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