Taiwan Economic Forecast

Taiwan Economic Outlook

June 19, 2018

Economic growth momentum likely moderated slightly in Q2 from Q1’s solid performance, due to a cyclical downturn in external demand affecting manufacturing output. In May, the manufacturing PMI reached an 11-month low as new orders slowed, dampening business confidence and employment growth. Trade data for Q2 shows a mixed trend so far, with cyclically weak global demand for smartphones and computers but otherwise robust dynamics, especially for electronics. Nevertheless, private consumption should remain strong as wage growth accelerates, compensating somewhat for external demand weaknesses. Heading into Q3, the external sector could benefit from accelerating U.S. growth, but remains vulnerable to an escalation of the U.S.-China trade dispute.

Taiwan Economic Growth

Domestic dynamics should lead growth this year, driven by robust household spending thanks to a tight labor market. Momentum in the external sector will likely moderate, however. A main downside risk is the escalation of the trade feud between China and the U.S., as electronic products—Taiwan’s flagship export—have been a point of contention in the dispute and are heavily integrated into both countries’ supply chains. Another major risk would be a spike in cross-strait tensions, given Taiwan’s dependence on China as its main export market. Earlier this year, China ramped up its efforts to attract qualified Taiwanese workers, which could accelerate the outflow of talent the country has been facing for years. Met the why particular panelists forecast GDP growth of 2.6% this year, which is unchanged from last month’s forecast. GDP growth is seen at 2.4% in 2019.

Taiwan Economy Data

20132014201520162017
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 %)2.24.00.81.42.9
Consumption (annual variation in %)2.33.42.62.32.3
Investment (annual variation in %)5.32.11.62.30.0
Industrial Production (annual variation in %)3.26.4-1.32.05.0
Retail Sales (annual variation in %)2.03.90.31.91.2
Unemployment Rate4.24.03.83.93.8
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 %)5.86.15.83.63.6
Inflation Rate (CPI, annual variation in %, eop)0.30.60.11.71.2
Inflation Rate (CPI, annual variation in %)0.81.2-0.31.40.6
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

ValueChangeDate
Bond Yield0.871.28 %Jul 13
Exchange Rate30.580.07 %Jul 13
Stock Market11,8650.37 %Jul 13

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