Taiwan raises growth forecast, leaves benchmark rate unchanged

TAIPEI: Taiwan's central bank revised up its growth outlook for the year on Thursday as strong exports bolstered the trade-reliant economy in the face of the coronavirus pandemic and left its policy rate unchanged as expected.

Taiwan has weathered the pandemic far better than many of its neighbours - it now has 134 active cases, all imported - and its tech products have become highly sought after as people take to working from home around the world.

The central bank kept the benchmark discount rate at a record low of 1.125pc, as expected by all 16 economists in a Reuters poll.

This is the third time this year it has decided to hold fire. It last cut rates at its March quarterly meeting.

The central bank raised its 2020 forecast for gross domestic product (GDP) growth to 2.58pc from 1.6pc predicted in September.

It said it saw next year's growth at 3.68pc, compared with 3.28pc seen at its last quarterly meeting.

"Taiwan's economic fundamentals are mainly tied to the government's effective control of the pandemic," central bank governor Yang Chin-long told reporters.

Economic growth next year will be "Nike-shaped", he added.

Economists have referred to Nike's Swoosh logo, or sloping L shape, to describe a recovery that is steady and gradual.

Exports this year had been "significantly" boosted by strong demand for electronics and telecommuting products as well as a recovery in traditional products including plastics and machinery in recent months, the central bank said in a statement.

It said it saw mild growth next year, boosted mainly by domestic consumption as well as continuous growth in exports thanks to strong tech demand globally.

Policymakers would pay close attention to developments including the pandemic, geopolitical risks and the changing U.S.-China relationship, the central bank added.

Taiwan's economy shrank 0.58pc in the second quarter from a year earlier, but bounced back strongly in the third quarter, growing 3.92pc.

Taiwan's manufacturers are a key part of the global supply chain for technology giants such as Apple Inc.