Taiwan Economic Forecast

Taiwan Economic Outlook

August 25, 2020

The economy contracted at the sharpest pace in over a decade in Q2, battered by Covid-19. The downturn was chiefly driven by a collapse in tourist arrivals, which hammered the external sector, while the constraining effects of the lockdown on household spending led to the largest drop in private consumption on record. Meanwhile, investment activity held up fairly well in Q2, supported by robust global demand for the country’s technology exports, which softened the overall blow. Turning to Q3, available data points to a gradual recovery. In July, the manufacturing PMI rebounded to a six-month high, consumer confidence edged up and merchandise exports rose for the first time since February. That said, business confidence inched down in the same month, while the tourism sector remained in the doldrums, signaling headwinds to recovery ahead, despite the government’s USD 35.9 billion fiscal stimulus package.

Taiwan Economic Growth

The economy is expected to grind to a halt this year, mainly due to a slump in household consumption and as challenging external conditions weigh on exports. Moreover, investment activity will likely cool, but still remain expansionary, thanks to a booming technology sector. The risk of a second outbreak and heightened geopolitical tensions with China cloud the outlook. FocusEconomics panelists see GDP growth to stagnate at 0.0% in 2020, which is up 0.3 percentage points from last month’s estimate, before growing 3.0% 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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