TAIPEI: Taiwan and the world finished 2017 on a good note – with the expectation of more good news in 2018. The Taiwan economy ended the year by recording its strongest growth level in years, on the back of record-high exports. Momentum is likely to continue into 2019, with leading indicators all pointing upwards.
Taiwan’s trade-dependent economy was buoyed by stronger than expected growth in global trade. Exports continued their bull run through December, increasing 13.2% for 2017 in annual comparisons, for a total value of US$317.4 billion, according to data from the Bureau of Foreign Trade under the Ministry of Economic Affairs.
The global trade environment appears favorable. The International Monetary Fund raised its worldwide economic growth forecast for 2018 to 3.9%, even stronger than the 3.7% growth in 2017, on the expectation that global trade and investment will remain vigorous. Tax reform in the United States is expected to have a strong impact as well.
Taiwan’s exports by spurring capex demand in the United States, which will likely raise demand for Taiwanese equipment and components. Taiwan is the tenth largest trade partner to the United States, and the United States is Taiwan’s second largest trade partner. Exports to the United States rose 10.3% in 2017 to reach US$36.978 billion. Imports from the United States also rose but at a slower pace, despite pressure from the Trump administration to reduce trade deficits. Total imports from the United States amounted to US$30.2 billion, a 5.6% increase, for a US$6.8 billion balance in Taiwan’s favor. China, Taiwan’s leading trade partner, was expected to record some 6.4% economic growth in 2017, and that pace looks likely to continue unabated. Taiwan’s exports have benefited accordingly. Together with Hong Kong, China took 41% of Taiwan’s total exports last year – US$130.3 billion worth for a 16% increase in annual comparisons. The European Union (EU) emerged as a surprising engine of global trade in 2017, according to the IMF, and looks set to achieve growth of 2.3% in 2018. The EU’s return to growth is reflected in Taiwan’s trade with the continent, which rose 10.6% to US$27.18 billion in 2017. Taiwanese exports to ASEAN also surged in 2017, rising by 14.2% to US$58.6 billion, reflecting the Tsai administration’s New Southbound policy of promoting connections with Southeast Asia.