Taiwan unexpectedly became Asia’s top-performing economy last year — and outgrew China for the first time in 30 years, CNBC reports.
It came as strong global demand for the island’s tech exports outweighed the hit from the coronavirus pandemic.
The Taiwanese economy grew by 2.98 percent in 2020 compared to a year ago, advance estimates by the island’s statistics office showed on Friday.
It beat the 2.58 percent forecast by its central bank and edged out Vietnam’s 2.9 percent growth. Some economists had predicted Vietnam would be Asia’s fastest-growing economy in 2020.
Taiwan’s expansion last year was also higher than China’s 2.3 percent full year growth in 2020. The island last outgrew its giant neighbor in 1990, when its 5.5 percent growth beat China’s 3.9 percent, official data from both sides showed.
It beat the 2.58 percent forecast by its central bank and edged out Vietnam’s 2.9 percent growth. Some economists had predicted Vietnam would be Asia’s fastest-growing economy in 2020.
Taiwan’s expansion last year was also higher than China’s 2.3 percent full year growth in 2020. The island last outgrew its neighbor in 1990, when its 5.5 percent growth beat China’s 3.9 percent, official data from both sides showed.
“2020 has been a record year for Taiwan, and we expect the star to continue shining,” Angela Hsieh, an economist at British bank Barclays, wrote in a Friday report after Taiwan released the numbers.
The island’s strength in exports in the second half of last year — particularly of semiconductors — helped the economy to “easily offset” any drags from the pandemic, said Hsieh. The economist raised her forecast for Taiwan’s 2021 growth by 1.2 percentage points to 5.2 percent — much higher than official projection of 3.83 percent.
Taiwan has also had relative success in containing the spread of Covid-19, allowing its economy to avoid a strict lockdown experienced by others globally. As of Sunday, the island reported 911 confirmed infections and eight deaths, according to the Taiwan Centers for Disease Control.
Taiwan is a powerhouse in the production of semiconductors, which are important components powering products from cars, to computers and mobile phones.
Demand for chips surged globally when the pandemic forced people to spend more time indoors, as the lockdowns triggered an uptick in sales of consumer electronics such as laptops.
More recently, a global shortage of semiconductors led several automakers — including American carmaker Ford Motor and Japan’s Nissan Motor — to cut production at some of their plants.
Economists at research firm TS Lombard estimated that Taiwan and South Korea account for 83 percent of global processor chip production and 70 percent of memory chip output — which means the two East Asian economies have a near-monopoly status in both segments of the industry.
That dominance would allow Taiwan and South Korea to “leverage their increased strategic importance for economic and political gains” from the U.S. and China — their two largest customers, the economists said in a Friday note.
“Taiwan and Korea are on the front line of the US-China confrontation, reliant on China for growth, but on the US as guarantor of national security,” they said.
For Taiwan, such “wins” have included weapons sales from the U.S. and the lack of economic pressure from China, said TS Lombard economists.
“Cutting out US suppliers further increases PRC reliance on Taiwan and Korea,” wrote TS Lombard economists.
“Such is the Mainland dependence on Taiwan, that Beijing is unwilling to apply economic pressure to the island, instead China has adopted ‘grey zone’ warfare tactics, and even talk of military action, all while continuing to purchase TSMC products,” they added, referring to the world’s largest semiconductor foundry in Taiwan.
Dihua Street in Taipei’s Datong District yesterday, where people shop for food for the Lunar New Year. Weekend shoppers descended on local shops even though the Taipei City government has banned the street stalls that are usually set up on and around the street at this time of year.
