S&P Global raises Taiwan credit rating to 'AA' from 'AA-'

Finance | 22 Apr 2021 5:21 pm

S&P Global Ratings raised its long-term foreign and local currency issuer credit ratings on Taiwan to 'AA' from 'AA-' on Thursday, saying the outlook on Taiwan was positive on robust economic growth, though warned of risk from China tensions, Reuters reports.

Last month the central bank raised its 2021 estimate for gross domestic product (GDP) growth to 4.53 percent from 3.68 percent forecast in December. Growth cooled to 3.11 percent in 2020 but snapped back sharply in the fourth quarter from a steep contraction early in the year.

S&P said their positive outlook reflected expectations Taiwan's economy would maintain good growth over the medium term, supported by strong external demand for electronics exports.

"Taiwan's effective response to the coronavirus disease, robust net external asset position and competitive private sector enabled economic growth to accelerate in 2020 despite the global pandemic," it said.

S&P warned that it may lower the ratings if relations across the Taiwan Strait deteriorate abruptly. China has in recent months ramped up military activity near the island it claims as its own, seeking to assert Chinese sovereignty.

"Although geopolitical tension has risen, our base case remains that cross-strait and international trade relations will not fundamentally disrupt Taiwan's economic stability," S&P said."However, cross-strait tensions have recently increased against the backdrop of heightened geopolitical risk. This presents a risk that weighs more on Taiwan's credit metrics than before."-Photo: CNA

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