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Taiwan’s growth momentum to stay soft with GDP growth at 2.1 percent through this year, according to the latest report from ANZ Research; GDP growth continues to face headwinds owing to weak export performance.
Growth fell to 1.8 percent y/y in Q4 2018, with contribution from net exports dropping to -1.4ppts (vs 2.8ppts in Q4 2017) although government consumption provided some support.
Asian economies play important roles in global tech supply value chains. The current downturn has impacted their trade and growth outlooks.
Smartphone shipments peaked at 1.5 billion in 2016. The declines in 2017 and 2018 mirrored a plunge in the electronic exports of Taiwan, South Korea, Vietnam, and China.
After the 2015-16 trade slowdown, FX flows and equity market performance have increasingly reflected underlying trends in the electronics sector.
"We believe Taiwan’s domestic markets will continue to be strongly related to export demand. The global electronics downturn will have a bearing on Taiwan’s financial sector. Muted inflation impulses, subdued domestic outlook and weak external conditions are likely to prompt the CBC to maintain an accommodative stance. We expect the policy rate to remain unchanged at 1.375 percent through 2019, barring a hawkish tone by the US Fed or a sharp jump in domestic inflation," ANZ Research further commented.
