East Asia Forum
Date: 25 December 2019
By: Roy Chun Lee, CIER
It has been another challenging year for Taiwan filled with both excitement and concern. Two key factors shaped the development of 2019 were the US–China trade war and the upcoming Taiwan presidential election.
In terms of economic performance, the Chung-Hua Institution for Economic Research (CIER) forecasts Taiwan’s GDP growth to be one of the highest in the East Asian region, reaching 2.33 per cent. While trade performance has declined throughout the year, domestic investment in the manufacturing sector has soared to a historic high, contributing to GDP growth. This outcome can be partly attributed to the US–China trade war. The surge of investment is mainly underpinned by the homecoming of Taiwanese original equipment manufacturing (OEM) companies — that previously used China as their production base — trying to circumvent tariffs for their US clients.
According to government figures, committed investment reached US$27 billion as of December, with US$8.7 billion already realised. Around 70 per cent of this investment is in the information and communication technologies (ICT) sector, followed by electronic machinery, consumer products and chemicals. With the effect of creating job opportunities as well as new dynamics for economic activities, short-term prospects are looking positive for 2020.
The upcoming 2020 presidential election has prompted the government to accelerate major decisions on public investment, including the extension of the high-speed rail system to cities that were previously considered economically unviable. But many critics question feasibility and worry over the lack of transparent impact assessment processes. [FULL STORY]