Moody’s Investors Service yesterday affirmed Taiwan’s sovereign credit rating of “Aa3” and changed its credit outlook for the nation to “positive” from “stable,” the first time the ratings agency has given the nation that credit outlook since 1994.
“The decision to change the outlook to positive from stable reflects increasing signs that Taiwan’s economy is more resilient and that its governance strength is stronger than previously assessed,” Moody’s said in a statement.
The Ministry of Finance welcomed the agency’s move.
Photo: David Chang, EPA-EFE
“This is the first time Moody’s has raised its outlook for Taiwan since 1994, when it first issued its sovereign credit rating,” the ministry said in a statement.
“The positive outlook indicates that the nation’s sovereign rating may be upgraded within one year,” it said.
Taiwan’s export-oriented high-tech manufacturing sector has benefited from demand for semiconductors amid the global surge in remote working, and it is likely to boost the nation’s competitiveness in the medium term, Moody’s said.
That is because changes in people’s behavior and work practices amid the COVID-19 pandemic would continue to boost demand for Taiwan’s products, while the nation’s track record of sound policy effectiveness, aided by robust fiscal and external positions, supports its credit profile, Moody’s said.
Taiwan’s strong fiscal and external buffers would remain intact through the pandemic shock, and continue to strengthen compared with other Aa-rated peers, it said.
However, ongoing geopolitical tensions and the nation’s aging demographic would remain constraints for its credit profile going forward, it said.
Taiwan’s real GDP growth is expected to accelerate to 3.7 percent this year, from 3.1 percent last year, while its fiscal deficit to GDP is predicted to fall to 1 percent this year from an estimated 2.1 percent last year, which Moody’s said is considerably lower than the median fiscal deficit of between 3 and 5 percent of GDP for other Aa-rated economies.
After several years flying high as Asia’s best Nvidia Corp proxy, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is increasingly vying with other artificial intelligence (AI) stocks for investor attention. Stock traders are chasing a wider array of beneficiaries as mainstream usage of AI creates demand for hardware beyond the most-advanced chips TSMC makes for Nvidia. Subthemes from the deepening memory crunch to advances in robotics are also luring bids. At the same time, investment caps on single stocks are pushing funds to diversify, while retail investors long familiar with TSMC through its US depositary receipts are being offered a broader set of
UNDER MICROSCOPE: Taiwan detained three people who allegedly conspired to buy servers in Taiwan and export them using fraudulent documentation, prosecutors said Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday urged Super Micro Computer Inc to tighten up on compliance after Taiwan detained three people this week for allegedly making fraudulent declarations about artificial intelligence (AI) servers made by its US partner. The development marked the nation’s first crackdown on semiconductor smuggling, which grew after the US slapped restrictions on exports of high-end chips such as Nvidia AI accelerators to China. Nvidia is “rigorous” in explaining regulations to all of its partners, Huang told reporters after arriving in Taipei. “Ultimately Super Micro has to run their own company,” he said in response to
TECH RELIANCE: Growth is increasingly reflecting an unequal K-shaped distribution, where technology sectors outperform and other industries struggle, an expert said Standard Chartered Bank has significantly raised its forecast for Taiwan’s economic growth to 9.5 percent this year, up from 7.6 percent previously, citing surging artificial intelligence (AI) demand driving exports, semiconductor production and investment. The upgrade reflects a sustained AI supercycle that continues to fuel demand for advanced chips and technology infrastructure, which form the backbone of Taiwan’s exports, the bank said in a report this week. “We raise our 2026 growth forecast to reflect a much stronger-than-expected first-quarter GDP figure,” Standard Chartered senior economist for greater China and Asia Tommy Wu (胡東安) said in the report. Driven largely by a 35.3 percent
Two of Taiwan’s international carriers, Starlux Airlines Co (星宇航空) and EVA Airways Corp (長榮航空), have retained the five-star airline rating awarded by international airline review organization Skytrax. Starlux was awarded the distinction for a second consecutive year, while EVA Air received it for the 11th straight year, Skytrax said in statements released yesterday and on Thursday last week, respectively. The five-star rating is considered one of the airline industry's highest honors and is awarded following professional audits of airline product and frontline service standards, Skytrax said. The ratings are based on in-depth assessments using unified global quality standards rather than customer review scores
RSS