Taiwan Economics in Brief – April 2021

Business & Economic Optimism Abound

February was a down month for manufacturers in Taiwan this year, according to the results of a monthly business outlook survey conducted by the Taiwan Institute of Economic Research (TIER). It makes sense: February is already the shortest month of the year. Add to that the fact that both the Lunar New Year and the 228 Peace Memorial holiday fell in February this year. Nevertheless, businesses are feeling rather optimistic about the coming six months, with 52.1% expressing an upbeat outlook about their short-term business prospects.

Taiwan’s overall trade continues to grow at a steady clip, with exports in February increasing 9.67% from the same month last year. Imports also rose by 5.66% year-on-year, while Taiwan’s trade balance for the first two months registered a surplus of US$10.7 billion. Export orders in February increased 48.5% year-on-year to US$42.59 billion, marking the twelfth consecutive month of growth. The Ministry of Economic Affairs (MOEA) cited steady shipments of electronic products to supply the work-from-home economy as the main factor contributing to the increase.

The Yuanta-Polaris Research Institute and Cathay Financial Holding Co. have joined the chorus of Taiwan-based organizations projecting annual GDP growth of over 4% in 2021. Yuanta-Polaris in late March forecast economic growth of 4.4%, 1.3 percentage points higher than its prediction made last September. Cathay, meanwhile, puts Taiwan’s 2021 economic growth at 4.2%, a full percentage point higher than its December 2020 forecast. The company cited strong private investment and an improving global economic situation.

Taiwan’s two oil refiners – state-owned CPC, Taiwan Corp. and the private Formosa Petrochemical Corp. – on March 21 raised gasoline prices and diesel prices by NT$0.5 and NT$0.6 respectively. According to CPC, Taiwan, the decision to raise prices was based on floating oil-price calculations and price adjustment principles. It added that crude oil prices dropped by 1.51% due to halts in EU vaccination rollouts and the EU’s stringent Easter lockdowns.

The Central Bank of the Republic of China (CBC) left key interest rates unchanged after its quarterly policymaking meeting on March 18. The decision leaves discount rates at 1.125% – the lowest in Taiwan’s history – while the rate on accommodations with collateral and rate on accommodations without collateral remain at 1.5% and 3.375% respectively. As Taiwan has seen little inflationary pressure and is expected to maintain steady growth, the CBC suggested that there is no urgency for monetary contraction.

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