Taiwan chart book: Trade war’s costs and silver lining


Industrial activities extended weakness in May and consumer confidence plunged. But exports to the US picked up, and investment applications from the offshore Taiwanese firms started to increase.
Ma Tieying17 Jun 2019
Photo credit: AFP Photo


• Exports and industrial activities extended weakness in May, in the context of escalating China-US trade war.

• Consumer confidence also took a toll due to the stock market declines and TWD depreciation.

• Bright spots include the rise in Taiwan’s exports to the US (trade diversion effect of the trade war), and the increase in domestic investment applications from the Taiwanese firms with operations in China (supply chain diversification effect of the trade war).

• Monetary conditions remain accommodative, thanks to the decline in short-term real interest rates, slide in bond yields, TWD depreciation, and pickup in M2 growth.

• We maintain GDP growth forecast at 1.9% for 2019 and expect the central bank to stand pat this year.



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Ma Tieying

Economist - Japan, South Korea, & Taiwan
matieying@dbs.com

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