The current report shows that Taiwan’s export posted the steepest decline in 32 months on December 2018. However, Taiwan’s export orders continue to disappoint up to half of this year. Many wonder if government current policies can attract more manufacture to operate in Taiwan. While, some others also wonder if the central bank will cut rates, following its Asian peers.
Exports in Taiwan fall for the eight-month in a row. It decreases by $ 1.82 billion from June 2018, 4.5% Year over Year (YoY). In the second quarter of 2019, they feel 4.7% of YoY.
The speed of reduction is indeed slower than the end of 2018, but it is falling nonetheless. Consequently, Taiwan’s production activities will also continue to weaken.
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Attracting Investment
With the current fast technology development, Taiwan possesses a negative environment for companies. The government offers a preferential interest rate policy. They aim to encourage foreign companies to move their production lines to Taiwan. Currently, many foreign companies prefer mainland China over Thailand to produce their product.
Taiwanese government still remains optimistic. Moreover, they project that with the more usage of 5G companies will have reason to move. Once foreign companies choose Taiwan, there will be a significant upturn in Taiwan’s production and, of course, its exports.
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The Central Bank won’t Cut Rates
Many Asian central banks have cut interest rates. While Taiwan’s central bank has responded by not changing its rates anytime soon. Their rates arecurrently at 1.375%.
Taiwan CPI inflation is low. It is at 0.86 % YoY. At the same time, Taiwan has avoided falling GDP. Their economy growth, which in the first quarter of 2019 is at 1.71 %, has saved their GDP. Many experts expect the number will reach 1.8 % by the end of 2019.
Given that their rates are already low, it’s difficult for the bank to further cut it in order to boost its growth.
