Projections for Taiwan’s 2023 economic growth were lowered to only 1%, which would be a sharp drop compared to the previous year. That’s according to the international credit rating agency Fitch Ratings on Wednesday.
The forecast was based on the weak global economy and the significant downcycle of the semiconductor industry following the COVID-19 pandemic. Fitch says that exports have declined and investment demand has slowed, adding however that the economy may have now bottomed out.
Fitch believes Taiwan’s strong private consumption has been a key driver of economic growth, helped by loosening border controls and government stimulus measures.
Fitch predicted that growth could reach 2.8% next year should there be an upturn in the technology cycle towards the end of this year. Head of sovereign ratings Thomas Rookmaaker warned, however, rising cross-strait tensions and an aging population may add challenges to the medium-term economic growth outlook. Fitch earlier announced that Taiwan maintains its AA rating based on its stable finances, but its per capita income is low compared to other countries with the same rating.