Taiwan Economic Outlook – February 2020

2019 Ends Well for Taiwan Economy

Prior to the recent national elections, Bloomberg reporter Tim Culpan compiled and analyzed economic data that spanned the terms of all of Taiwan’s democratically elected presidents. His January 8 op-ed, titled “A Taiwanese Election That’s Not All About China,” argued that economic considerations, rather than just cross-Strait relations, would play a major part in how Taiwanese voted. He noted from the data that strong economic performance under the Tsai administration in the areas of stock market returns, GDP and wage growth, and unemployment levels would help to ensure a smooth victory for the incumbent. 

Thanks to knock-on effects from the U.S.-China trade dispute, 2019 proved to be a relatively good year for the Taiwanese economy. The Directorate-General of Budget, Accounting and Statistics calculated full-year GDP growth at 2.73%, boosted by the vigorous 3.38% growth achieved in the fourth quarter. Although exports were down by a slight 1.4% year-on-year to amount to US$329.3 billion, sales to the U.S. increased by a hefty 17.2% over 2018 to reach US$46.3 billion. Overall, Taiwan registered a 2019 trade surplus of US$43.5 billion, a decrease of 9.25% from the same period in 2018.

The Ministry of Economic Affairs reported in January that Taiwan’s export orders, a leading economic indicator, rose by 5.3% year-on-year in the last month of 2019, reversing a 14-month decline. Nevertheless, export orders received by Taiwanese companies fell by 5% for the year as a whole, with trade tensions between the U.S. and China cited as the primary factor. The Lunar New Year holiday is expected to cause a further drop in export orders for January. 

Total foreign direct investment (FDI) approved by Taiwan’s government in 2019 decreased by around 2.14% from the previous year, the Central News Agency reported, but still represented the fourth highest amount on record. Investment Commission-sanctioned FDI last year totaled US$11.2 billion, down from US$11.4 billion in 2018. The highest annual amount of FDI recorded was US$15.3 billion in 2007.

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