Moody’s Investors Service is projecting that Taiwan’s economic growth will reach only 0.2% in 2020. That’s as the COVID-19 pandemic hits Taiwanese exports. However, Moody’s expects Taiwan’s economy to rebound next year, with growth of about 3.7%.
Moody’s analyst Michael Higgins says that Taiwan’s swift recovery will be aided by continued investment from Taiwanese companies overseas and rise in demand for Taiwan’s high-quality electronics.
Moody’s says Taiwan’s open trade and its close trade ties with China have left it vulnerable to effects of the US-China trade war. However, it also says that Taiwan could benefit from a movement away from reliance on China as a trade partner. This is because Taiwan and China export similar products. Also helping Taiwan are its high competitiveness and technological prowess. Moody’s predicts that the government will likely pursue policies to strengthen Taiwan’s competitive edge internationally.
Moody’s says it could upgrade Taiwan’s credit rating if the country can strengthen its economic growth potential to offset the drag from its aging population while also improving its relations with China.