Taiwan Economic Outlook
January 22, 2019All available data indicates the economy continued to weaken markedly in the fourth quarter after starting to slow in the third quarter. This loss of momentum is most likely to persist into 2019, as the country grapples with the impact of a slowdown in China and heightened trade frictions. The manufacturing PMI entered contractionary territory in October and continued to weaken throughout the quarter, weighed notably by lower new demand as a direct result of the U.S.-China trade war. Consumer confidence also fell every month in the quarter. Meanwhile, export growth was nearly flat year-on-year in Q4 as Taiwan’s flagship trade sector suffered both from lower Asian demand and from a downturn in the tech cycle, notably for smartphones. Export order data for November also signals the sector will likely remain weak in Q1. On 11 January, Parliament approved the government’s TWD 2.0 trillion budget for 2019. On the political front, tensions with mainland China escalated in recent weeks after Xi Jinping’s declaration on 2 January that China would not discount the use of military force to complete reunification with the island. Unsurprisingly, this drew a swift rebuke from President Tsai.
Taiwan Economic GrowthEconomic activity will likely be hit by growing headwinds this year, due to its significant exposure to the Sino-American trade war—especially so in the tech sector. Taiwan’s high dependence on China is also a key vulnerability, owing to risks of a mainland slowdown and rising cross-strait tensions. Nonetheless, a TWD 228 billion infrastructure package approved for 2019 and 2020 should support investment momentum this year and next. Met the why particular panelists forecast GDP growth of 2.2% in 2019, which is unchanged from last month’s forecast, and 2.1% in 2020.
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|Bond Yield||0.84||1.28 %||Feb 14|
|Exchange Rate||30.83||0.07 %||Feb 14|
|Stock Market||11,089||0.37 %||Feb 14|
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Taiwan Economic News
February 15, 2019
Merchandise exports fell 0.3% in annual terms in January, improving over December’s 3.0% year-on-year contraction and overshooting analysts’ estimates of a 2.9% fall.
February 12, 2019
Consumer prices fell 0.09% in January from the previous month, which was less severe than the 0.50% decline registered in December.
February 1, 2019
Operating conditions in the Taiwanese manufacturing sector continued to deteriorate in January, confirming that the economy likely remained on a weak footing at the start of the year after losing momentum in Q4.
January 31, 2019
A preliminary estimate shows that economic growth continued to slow in the fourth quarter, as the trade sector remained on a feeble footing while domestic demand weakened somewhat.
January 23, 2019
Industrial output fell 1.2% year-on-year in December, contrasting the 2.4% growth logged in November.