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Taiwan says economy to rebound; 2021 rate increase depends on situation
[TAIPEI] Taiwan's economic growth this year is expected to be better than originally forecast, but whether an interest rate increase happens in the first half of next year depends on the situation then, central bank governor Yang Chin-long said on Wednesday.
The central bank cut the benchmark discount rate in March to a historic low of 1.125 per cent, and has kept it unchanged at its two subsequent quarterly meetings, with the next one scheduled for Dec 17.
However, taking lawmakers' questions at Parliament, Mr Yang noted that the conditions did not exist to raise interest rates in any other country.
The central bank is to give an update on economic growth forecasts at its next quarterly meeting. It raised its 2020 forecast for gross domestic product (GDP) growth to 1.6 per cent in September.
Last month, in a separate forecast, Taiwan's statistics office raised its full-year growth prediction to 2.54 per cent, the slowest in four years but far better than many of its regional peers.
Taiwan's export-reliant economy has been supported by global demand for tech products from an increasing number of people working and studying from home during the pandemic. That trend is expected to continue and help underpin a rapid economic recovery in 2021.
The Taiwan dollar has also performed strongly this year, gaining around 5.6 per cent against the greenback even with central bank intervention to steady it, prompting concern that the United States may name Taiwan a currency manipulator.
Mr Yang said Taiwan would have "thorough communication" with the United States on this issue, noting that the island already meets two of three criteria for being on the US monitoring list.
Taiwan's 2019 trade surplus with the United States hit US$23 billion, exceeding an assessment threshold of US$20 billion.
Meanwhile, Taiwan's current account surplus was 10.5 per cent of GDP last year, well above the monitoring threshold of 2 per cent.
Taiwan was last formally labelled a currency manipulator by the United States in December 1992, but was later put on the US Treasury monitoring list in 2016 and 2017.