Taiwan central bank keeps policy rate unchanged, raises 2021 growth forecast

[TAIPEI] Taiwan's central bank revised up the island's growth outlook for the year on Thursday as strong exports bolstered a trade-reliant economy that has been resilient in the face of local Covid-19 cases, keeping interest rates steady as expected.

Taiwan's economy has continued to boom despite the uptick in infections, now well under control, buoyed by strong global demand for its tech products as many people work and study from home during the pandemic.

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.

The central bank also raised its 2021 estimate for gross domestic product (GDP) growth to 5.75 per cent from 5.08 per cent forecast in June. Growth hit 3.11 per cent in 2020, after expanding 2.71 per cent in 2019.

GDP expanded by 7.43 per cent in the second quarter of 2021, down from 8.92 per cent in the first quarter, impacted by a partial lockdown to prevent domestic Covid-19 infections from spreading.

For 2022, the bank said it saw GDP expanding 3.45per cent.

"Looking at next year, major economies will continue to recover, and demand for new technologies will remain high - which is likely to continue to boost the momentum of Taiwan's exports and domestic investment," the central bank said in its statement.

REUTERS