TAIPEI (CNA) — Standard Chartered Bank, a leading British banking group, has forecast that Taiwan’s gross domestic product (GDP) will grow 2.2 percent year-on-year in 2020, outperforming its major neighboring economies.
Tony Phoo (符銘財), a senior economist at Standard Chartered Bank for East Asia, said in a Thursday conference held by the bank to report the global economic outlook for 2020, including that of Taiwan, that the country is expected to continue to benefit from diversion by Taiwanese exporters seeking to secure more orders from foreign buyers who want to shun the impact arising from the trade dispute between the United States and China.
According to Standard Chartered Bank, Taiwan is expected to perform better than its neighbors, forecasting that Singapore’s economy will grow 1.4 percent in 2020, while Hong Kong will suffer a contraction of 1.5 percent. Taiwan will be tied with South Korea in 2020, the bank forecast.
The bank appeared more cautious than Taiwan’s government, however, as the Directorate General of Budget, Accounting and Statistics (DGBAS) raised its forecast for the country’s 2020 GDP growth in November to 2.72 percent from 2.58 percent.
Phoo said the bank’s forecast appeared conservative compared with the DGBAS estimate, but added that it is possible the bank will upgrade its expectation later, as more and more Taiwanese firms are keen to raise their production at home because of the Washington-Beijing trade friction.
In addition to the trade diversion effect and more investment by Taiwanese exporters at home, Phoo said Taiwan is expected to continue to see the semiconductor industry enjoy handsome sales in the global market in 2020, with many integrated circuit firms scrambling to pour funds into high-end production processes.
Phoo said that as the semiconductor industry serves as an anchor to Taiwan’s manufacturing sector, so a growing IC industry is expected to help the entire economy steam ahead in 2020.
The economist cited data compiled by the Ministry of Economic Affairs as saying that Taiwanese investors have allocated more funds in Southeast Asian markets in recent years to reduce their economic dependence on China and since the economies in Southeast Asia are expected to generally perform well in 2020, Taiwan is expected to benefit.
According to Phoo, China accounts for less than 50 percent of Taiwan’s total investment at present, down from a recent peak of 70 percent-80 percent.
He said Taiwan’s GDP growth for the first half of 2020 is expected to hit 3 percent, similar to a level in the third quarter of this year, adding, however, that the performance in the second half of next year will depend on how the global trade issue evolves and how the U.S. economy develops ahead of the 2020 presidential election there in November.
As for 2019, Phoo said Taiwan’s GDP is expected to grow 2.4 percent, up from the previous estimate of a 2.1 percent increase made in August. The bank’s 2019 forecast was also shy of the DGBAS forecast of a 2.64 percent increase.
Standard Chartered Bank has forecast that the global economy will grow 3.3 percent in 2020, compared with an anticipated 3.1 percent increase for 2019, citing ample liquidity, loosening monetary polices of the major central banks, growth momentum in Asia and higher demand for electronic devices.
The bank said it is confident that trade ties between Washington and Beijing will improve in 2020, which will boost the global economy.