Taiwan Economic Forecast

Taiwan Economic Outlook

June 21, 2022

After growth moderated in Q1, underlying momentum is easing in Q2. Pandemic-related restrictions in China and generally less favorable global demand conditions are weighing on the external sector and manufacturing. In May, the manufacturing PMI tumbled to a near two-year low and export growth waned, while export orders fell in April. Moreover, the non-manufacturing index plunged into contractionary territory in May, as record Covid-19 cases led to greater caution among consumers and firms. However, the government’s pivot towards living with the virus will limit the fallout. Despite surging caseloads, travel restrictions are being progressively eased, with the quarantine time for visitors cut to three days in June. In other news, Taiwan and the U.S. recently launched a trade “initiative”, signaling warming ties with Washington. However, the shift falls far short of a comprehensive trade deal.

Taiwan Economic Growth

Growth should be robust this year, thanks to the strong semiconductor industry and a tighter labor market. That said, the ongoing Covid-19 outbreak at home, higher interest rates and a weaker Chinese economy will take the edge off momentum. Rising cross-strait tensions and a potentially prolonged Chinese economic slowdown are risks. FocusEconomics panelists see GDP growing 3.5% 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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