Taiwan

Current Economic Outlook

Taiwan experienced a severe economic downturn beginning in late 2008 due to a high degree of trade openness. The economy bottomed out in Q1 2009 and grew over 20% on a q/q seasonally adjusted basis in Q2 2009 as global demand improved and aggressive stimulus measures supported consumption. Given Taiwan’s limited consumption base and strong linkages between exports and the domestic economy, Taiwan’s recovery will follow that of the U.S. If a U‐shaped recovery is in the cards for the U.S., Taiwan will see a slower U‐shaped recovery as a revival in external demand spills over into domestic demand via the export channel. However, if the U.S. faces a double‐dip recession, Taiwan’s recovery will be more protracted. In RGE’s U‐shaped base scenario, weak demand at home and abroad suggests Taiwan will grow below its 5% potential in 2010, after a 4.8% contraction in 2009. Though exports are still falling sharply, at over 20% y/y as of August 2009, the pace of contraction has eased significantly since Q2 2009 and exports are climbing sharply m/m.

Read the latest RGE Global Economic Update.