The Taiwan Institute of Economic Research has announced Friday that it now predicts Taiwan’s economy will grow 5.4% in 2021. That’s up 0.37 percentage points from the institute’s previous prediction, made in April.
A notable increase in Taiwan’s exports is the main reason for the revised figure. According to institute director Chang Chien-yi, the gradual relaxation of COVID-19 pandemic-related measures worldwide has helped stimulate demand, leading to growth in Taiwanese exports that has exceeded expectations. The institute now predicts that Taiwan’s exports will increase by 19.77% this year, 9.54 percentage points higher than its previous prediction.
Strong export performance has in turn stimulated domestic investment. Private investment in the semiconductor industry is expanding in particular, spurred on by manufacturers’ current inability to meet demand. In addition, Taiwanese businesses bringing back their overseas operations are continuing their domestic investment.
However, COVID-19 has seen private spending shrink as people avoid going out. Therefore, the institute now only expects private spending to grow 2.84% this year, 1.51 percentage points less than it previously predicted. The institute does however say that with the pandemic now under control in Taiwan, there is a chance for a rebound in spending in the second half of the year.