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Taiwan Economic Forecast

Taiwan Economic Outlook

The economy registered expansions of 1.4% in both annual and quarter-on-quarter terms in Q2, overshooting market expectations. The year-on-year reading was driven by double-digit private consumption growth, which more than offset lower exports and investment. Turning to Q3, economic activity likely continues to expand both year on year and sequentially. Private spending and tourism appear to be driving factors behind year on year growth: In July, retail sales rose 5% in annual terms and tourist arrivals reached 55% of 2019 levels, up from 51% in Q2. Moreover, the export-oriented industrial sector is set to exert less of a drag on activity in Q3, as the declines in merchandise exports and industrial production—though still sharp—have eased so far this quarter, likely thanks to firming demand for high-end electronics.

Taiwan Inflation

Inflation came in at 2.5% in August, up from July’s 1.9% and the highest inflation rate since January. That said, inflation remains low compared to the levels in other advanced economies. Our panelists see inflation averaging close to 2% for the remainder of this year. The recent uptick in energy prices will be broadly offset by the dampening effect of past rate hikes.

This chart displays Economic Growth (GDP, annual variation in %) for Taiwan from 2013 to 2022.

Taiwan Economic Data

2018 2019 2020 2021 2022
Population (million) 23.6 23.6 23.6 23.4 23.3
GDP (USD bn) 609 612 676 778 760
GDP per capita (USD) 25,835 25,919 28,707 33,292 32,583
GDP (TWD bn) 18,375 18,909 19,915 21,739 22,667
Economic Growth (Nominal GDP, ann. var. %) 2.2 2.9 5.3 9.2 4.3
Economic Growth (GDP, ann. var. %) 2.8 3.1 3.4 6.5 2.4
Domestic Demand (ann. var. %) 3.6 3.3 0.9 5.0 3.8
Private Consumption (ann. var. %) 2.1 2.3 -2.6 -0.4 3.5
Government Consumption (ann. var. %) 4.0 0.5 2.8 3.7 3.6
Fixed Investment (ann. var. %) 3.2 11.1 6.1 14.5 6.3
Exports (G&S, ann. var. %) 0.2 0.7 1.2 17.3 2.2
Imports (G&S, ann. var. %) 0.8 0.5 -3.5 18.1 4.5
Industrial Production (ann. var. %) 3.4 1.0 8.8 14.7 -1.7
Retail Sales (ann. var. %) 2.2 3.1 0.2 3.3 7.4
Unemployment (% of active population, eop) 3.7 3.7 3.7 3.6 3.5
Unemployment (% of active population, aop) 3.7 3.7 3.8 4.0 3.7
Fiscal Balance (% of GDP) 0.0 0.1 -1.0 -0.2 0.2
Public Debt (% of GDP) 33.9 32.7 32.1 30.1 -
Money (ann. var. of M2 %) 2.7 4.5 9.4 7.3 6.7
Inflation (CPI, ann. var. %, eop) -0.1 1.2 0.0 2.6 2.7
Inflation (CPI, ann. var. %, aop) 1.4 0.6 -0.2 2.0 2.9
Inflation (Core, ann. var. %, aop) 1.2 0.5 0.4 1.3 2.6
CB Discount Rate (%, eop) 1.38 1.38 1.13 1.13 1.75
31-90 Day CP Rate (%, eop) 0.67 0.67 0.48 0.48 1.36
10-Year Bond Yield (%, eop) 0.86 0.67 0.32 0.74 1.28
Stock Market (ann. var. of TAIEX %) -8.6 23.3 22.8 23.7 -22.4
Exchange Rate (TWD per USD, eop) 30.74 29.98 28.10 27.67 30.74
Exchange Rate (TWD per USD, aop) 30.15 30.91 29.44 27.93 29.81
Current Account Balance (USD bn) 70.7 65.7 97.3 118.0 101.3
Current Account Balance (% of GDP) 11.6 10.7 14.4 15.2 13.3
Merchandise Trade Balance (USD bn) 49.2 43.5 59.0 64.4 51.3
Merchandise Exports (USD bn) 334 329 345 446 479
Merchandise Imports (USD bn) 285 286 286 382 428
Merchandise Exports (ann. var. %) 5.9 -1.5 4.9 29.3 7.4
Merchandise Imports (ann. var. %) 10.7 0.3 0.2 33.5 12.1
Foreign Direct Investment (USD bn) 7.1 8.2 6.1 5.4 10.2
International Reserves (USD bn) 462 478 530 548 555
International Reserves (months of imports) 19.5 20.1 22.2 17.2 15.6
External Debt (USD bn) 191 185 190 214 202
External Debt (% of GDP) 31.4 30.2 28.1 27.4 26.6

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