Taiwan Economic Forecast

Taiwan Economic Outlook

November 13, 2018

The economy slowed sharply in the third quarter, mainly on the back of a marked loss of momentum in the all-important external sector and a slowdown in private consumption growth, as consumer confidence receded in the quarter while the trade war between the U.S. and China continued to escalate. Looking at the fourth quarter, available data suggests growth momentum will remain feeble. In October, the PMI fell into contraction territory for the first time in nearly two-and-a-half years amid falling orders and production. Meanwhile, export data was also weak, particularly due to subdued demand from mainland China—a trend that should continue throughout Q4 given the low growth from export orders logged in September. Though consumer demand may remain muted in the quarter, it will nonetheless be supported by a tight labor market. In addition, higher public infrastructure spending will likely help buttress investment in Q4 and beyond.

Taiwan Economic Growth

Growth will likely soften in 2019 and 2020 due to weaker export growth owing to the U.S.-China trade war—with a further escalation liable to severely hamper Taiwan’s flagship electronics. Nevertheless, the economy ought to be supported by resilient private spending and a sharp uptick in public expenditures, especially following the recent approval of a TWD 228 billion infrastructure package for 2019 and 2020. On top of the trade war, rising cross-strait tensions and the migration of skilled workers pose major downside risks. Met the why particular panelists forecast GDP growth of 2.2% in 2019, which is down 0.1 percentage points from last month’s forecast, and 2.0% in 2020.

Taiwan Economy Data

Population (million)23.423.423.523.523.6
GDP per capita (USD)21,89422,71622,55922,62924,112
GDP (USD bn)512532530533575
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)3.26.4-
Retail Sales (annual variation in %)
Unemployment Rate4.
Fiscal Balance (% of GDP)-1.4-0.80.1-0.3-1.4
Public Debt (% of GDP)33.832.831.631.230.7
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)0.81.2-
Inflation (WPI, annual variation in %)-2.4-0.6-8.9-3.00.9
Policy Interest Rate (%)1.881.881.631.381.38
Stock Market (annual variation in %)11.98.1-11.411.015.0
Exchange Rate (vs USD)29.8331.6332.8332.4529.67
Exchange Rate (vs USD, aop)29.6830.3131.7632.2430.42
Current Account (% of GDP)9.711.414.113.714.4
Current Account Balance (USD bn)49.960.474.972.882.9
Trade Balance (USD billion)33.438.248.149.858.0
Exports (USD billion)311320285280317
Imports (USD billion)278282237231259
Exports (annual variation in %)1.62.8-11.9-1.813.2
Imports (annual variation in %)0.21.4-15.8-2.812.4
International Reserves (USD)417419426434452
External Debt (% of GDP)33.233.430.032.331.6

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Taiwan Facts

Bond Yield0.911.28 %Dec 11
Exchange Rate30.920.07 %Dec 11
Stock Market9,6480.37 %Dec 11

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