By Austin Babb and Jason Wu
Sustained Growth Expected in 2021
While the combined effects of COVID-19 and the U.S.-China trade dispute caused many economies to contract in 2020, Taiwan boasted GDP growth of a projected 2.54%, 0.98 percentage points higher than forecasts made earlier in the year. This growth can be attributed primarily to increased global demand for products made by Taiwan’s export-oriented tech sector.
In terms of overall trade, Taiwan’s exports rose 4.9% in 2020, while imports grew by 0.3% from 2019. The Bureau of Foreign Trade reported a trade surplus of US$58.79 billion, a year-on-year increase of 35.14%. The two main sources of that surplus were the U.S. (US$38 billion) and China (US$17 billion).
The composition of Taiwan’s exports has also changed over the past year. With the growth in the semiconductor, electric vehicle (EV), and 5G industries bought about by the pandemic, Taiwan’s exports of machinery and electrical equipment have increased. In 2019, machinery and electrical equipment exports accounted for 59.6% of Taiwan’s total exports but expanded to over 63% in 2020.
Export orders, a leading indicator, also experienced record highs in 2020. The Ministry of Economic Affairs (MOEA) reported a total of US$533.66 billion in export orders in 2020, a 10.1% increase from the year before and the highest jump in three years. In December alone, export orders totaled US$60.55 billion, up 38.3% from the same month in 2019.
Given Taiwan’s strong economic performance in 2020, many expect that the ongoing impact of COVID-19 on the world’s leading economies and continued demand for electronics and semiconductors will result in sustained growth this year. The Taiwan Institute of Economic Research forecasts that Taiwan’s economic growth rate will be 4.3% in 2021.