Taiwan central bank raises GDP forecast, stands pat on rates

[TAIPEI] Taiwan's central bank revised up the island's 2021 growth on Thursday (Dec 16) as strong exports bolstered its trade-reliant economy that has boomed on strong global demand for technology, while also keeping its benchmark interest rate steady as expected.

Companies in Taiwan, home to major chip firms such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC), have benefited from laptop and tablet demand to support the work-and-study-from-home trend during the pandemic, as well as a global shortage of microchips.

The central bank raised its 2021 estimate for gross domestic product (GDP) growth to 6.03 per cent from a 5.75 per cent forecast in September.

Taiwan was one of the few Asian economies to grow in pandemic-hit 2020, expanding 3.11 per cent that year - faster than China - after 2.71 per cent growth in 2019.

GDP expanded in the third quarter of 2021 by 3.7 per cent versus the year-ago period, down from 7.43 per cent in the second quarter, pulled lower by a partial lockdown to prevent domestic Covid-19 infections from spreading - but policymakers have predicted 6 per cent or more growth for the full year because of the export surge.

For 2022, the bank said it saw GDP expanding 4.03 per cent, compared to a previous prediction of 3.45 per cent, with major economies continuing to recover and demand for new technologies remaining strong, helping Taiwan's exports and domestic investment.

The central bank kept the benchmark discount rate at a record low of 1.125 per cent, as expected by all 25 economists in a Reuters poll.

It has kept its policy rate unchanged at every quarterly meeting since cutting it in March 2020.

REUTERS