Taiwan Economic Forecast

Taiwan Economic Outlook

February 19, 2019

The economy ended the year 2018 on a feeble note, as confirmed by national accounts data for the fourth quarter. Private consumption growth continued to soften in the period, while the ongoing weakness of the crucial external sector—primarily due to a slowdown in China and the cloud cast by the Sino-American trade war—was likely a main factor weighing on investment, which also slowed in the period. Nevertheless, the public sector cushioned the blow, with government consumption rebounding solidly, while the infrastructure investment package passed in the FY18 budget partially offset weaker business investment. Looking at Q1, the picture appears similarly bleak with the trade sector set to stay anemic. In January, the manufacturing PMI fell further due to tepid overseas demand, confirmed by the third consecutive decline in merchandise exports in January. Moreover, export orders in December tanked by more than ten percentage points after already declining in November, indicating that actual shipments will likely continue to fall in coming months.

Taiwan Economic Growth

Growth prospects this year are increasingly challenging, with the U.S.-China trade spat, an ongoing mainland slowdown and rising cross-strait tensions all presenting significant downside risks to the outlook. Nonetheless, fiscal stimulus in the form of a large infrastructure investment plan should support domestic momentum. Met the why particular panelists forecast GDP growth of 2.2% in 2019, which is unchanged from last month’s forecast, and 2.0% in 2020.

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 Yield0.831.28 %Mar 11
Exchange Rate30.910.07 %Mar 11
Stock Market11,2500.37 %Mar 11

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