S&P Global Ratings yesterday raised Taiwan’s credit rating to “AA+” from “AA” with a stable outlook, driven by expectations that global demand for semiconductor exports would offset risks associated with longstanding cross-strait tensions.
Taiwan previously held the “AA+” rating 21 years ago, when in 2001 it was downgraded to “AA-.”
The return is driven by expectations that the nation would continue to benefit from global digitalization and maintain healthy fiscal metrics over the next three to five years.
Photo: Reuters
“We anchor our ratings on Taiwan on its strong external position and robust economic support,” the international ratings agency said, projecting GDP growth of 2.8 percent for this year and 2.6 percent for next year and 2024.
Demand for chips used in vehicles, consumer electronics and office equipment remains robust, it said, adding that 5G network deployment, data processing, electric vehicles and artificial intelligence technologies are also driving momentum.
The nation’s top semiconductor foundries have been aggressively expanding their capacity to alleviate global supply shortages, with their efforts accounting for a 17.3 percent spike in private investment last year.
Photo: Cheng Chi-fang, Taipei Times
The investment surge is expected to continue this year in light of capital spending plans unveiled by major local firms, it said.
Taiwan’s monetary flexibility is strong, as the central bank has demonstrated sound management, which has kept inflation low and stable despite ample liquidity in the economy, it said.
The relatively flexible exchange rate for the local currency also helps cushion economic and financial shocks, the agency said, adding that Taiwan’s inflation has been among the lowest in Asia.
Inflationary pressure is slowly building amid surging global commodity prices, and although the central bank last month raised interest rates by 0.25 percentage points, the policy rate remains fairly low, it said.
Low funding costs and ample liquidity have kept the government’s interest burden at less than 5 percent of general government revenue in the past few years, it said.
Despite rising numbers of COVID-19 cases, Taiwan appears to be moving toward opening up, supported by high vaccination rates, acceptable burdens on the healthcare system and mostly mild symptoms among recent cases.
In the absence of lockdowns, private consumption could recover soon, and if the government lifts border controls, tourism flows could provide a further boost to the economy, it said.
In the long run, stable international trade and cross-strait relations would remain the linchpin for Taiwan’s economic performance, it said.
Continued access to customers and suppliers from the US and China are crucial for Taiwan’s export-driven manufacturers to remain competitive and productive, it added.
However, an aging population and low labor productivity growth could lead to increased social and welfare spending, a fast-growing item on the government’s budget.
A magnitude 7.8 earthquake struck off the southern coast of Mindanao in the Philippines at 7:38am today, prompting the US Tsunami Warning System to issue an alert for neighboring countries, including Taiwan. The system issued a purple alert indicating a "tsunami threat." The potential threat zone includes Taiwan, the Philippines, Papua New Guinea, Yap and Palau. Philippine authorities were assessing the damage from the quake, with the office of civil defense seeking to verifying initial reports that 15 people had been killed and 129 injured in the region, mostly from falling debris. Arlene Hollero, disaster chief of Maasim town in the Philippines' Sarangani Province,
‘GRAY ZONE’ PRESSURE: Beijing’s activities are intended to create the deceitful impression that China has jurisdiction over the area around Taiwan, the CGA said Taiwan’s rights over its territorial waters and exclusive economic zone must not be violated by any country, the Mainland Affairs Council said yesterday, adding that it will not accept any unprovoked actions. The council issued the remarks in response to the China Coast Guard conducting maritime enforcement drills near eastern Taiwan and claiming to fully exercise China’s maritime administrative law enforcement authority. The Coast Guard Administration (CGA) has been closely monitoring the situation and is taking concrete steps to defend the nation’s sovereignty and secure its waters, the council said. China has no sovereign rights over the waters off eastern
RESILIENCE: Taiwan plays a key role in semiconductors, energy, information infrastructure and advanced manufacturing, AIT Director Raymond Greene said Taiwan’s continued investment in deterrence and resilience remains vital, especially in uncrewed systems and other emerging technologies, American Institute in Taiwan (AIT) Director Raymond Greene said yesterday. Greene made the remarks at the annual National Strategic Summit on Supply Chain Resilience held by the Research Institute for Democracy, Society and Emerging Technology (DSET), a government-backed think tank. As Taiwan last year became the US’ fourth-largest trading partner and supply chain security is becoming more important, cooperation in emerging technologies continues to deepen between the two countries, he said. The US is committed to accelerating innovation, building key infrastructure, strengthening cooperation
The National Chungshan Institute of Science and Technology yesterday showcased its locally developed variants of the Vision 60 robotic patrol dog, which it plans to deploy on the nation’s outlying territories in the South China Sea. The variants were produced under the Joint Lab project — created by the institute and domestic companies — and assembled with domestically produced motors, lenses and artificial intelligence (AI) systems alongside licensed tech from the US, Missile and Rocket Systems Research Division deputy director Jen Kuo-kang (任國光) told the media event at a military base in Taipei’s Dazhi (大直) area. Taiwan has built up its strengths
RSS