Taiwan's GDP to grow 2.5% in 2019

Investments is expected to pick up growth from tech firms.

Taiwan’s economy is projected to grow 2.5% for the rest of 2019 and 2.6% in 2020 as it continues to attract investments, according to Fitch Solutions.

Investments, which make up 22% of its GDP, is expected to pick up growth, as the nation attracts deals from tech firms whilst China, whom it competes with for tech equipment manufacturing, has been weighed down by the trade war.

Some global technology companies, including Google, Microsoft, IBM and Intel, have already expressed plans to amp up investments into Taiwan over the next few years.

President Tsai Ing-Wen’s ‘Invest Taiwan’ campaign is expected to bring more traction to investments through 2020. This involved measures placed since the start of 2019, like providing cheap credit and employment subsidies, to bring Taiwanese companies in mainland China to relocate back to Taiwan.

However, its export growth might be limited given that China and Hong Kong, its major trading partners, have been experiencing slowdown. The two account for over 40% of total exports, compared to around 12% for the US.

As such, Taiwanese companies are expected to continue diversifying in terms of export destinations. American companies relocating to Taiwan from China to avoid tariffs are also expected to bring growth as they export to the US.

Taiwan’s GDP growth sped up to 2.9% YoY in Q3 2019 from 2.4% YoY in Q2, which the National Statistics Republic of China (Taiwan) attributed to a growth in government spending by 3.7% YoY.

Investment growth contracted 1.0% YoY in Q3, but Fitch asserted that this was partially caused by lag in the materialisation of investment, as well as investors putting their investment plans on hold before the January 2020 presidential election.