China
United States of America
Hong Kong
Japan
Europe
South KoreaGradual recovery of the economy
The export-oriented island nation suffered from a sluggish global demand in 2023, implying bad external performances. Its exports decreased by 9% in the first half of the year compared to the same period in 2022. Exports to China and the US, its key trade partners, shrank respectively by 26% and 10% year-on-year in the January-August period. However, private consumption was strong and contributed the most to GDP growth. We expect the economy to recover gradually in 2024, driven by external rather than domestic demand, provided that the global economy improves and geopolitical tensions with China and in Ukraine do not escalate. An additional significant risk would be the spread of the conflict in the Middle East prompting a surge in oil prices and a slowdown in the global economy.
ICT products, particularly semiconductors, account for the bulk of Taiwan’s exports thanks to its important position in the global electronics value chain. After benefiting from a strong demand during the pandemic, demand fell drastically in 2023 due to subdued global economic recovery, characterised by a shift from manufacturing to services, high interest rates, increased global inflation and geopolitical tensions. Positive signs have emerged that point to a gradual recovery for the ICT sector in 2024. In March-July 2023, although electronic components exports were still lower than a year earlier, inventories started to decrease allowing a pickup in shipments. In addition, exports in information, and communication products surged by 49% in July-August 2023 compared to 2022. Looking forward, generative AI, cloud computing and the launch of new smartphones and PCs that induce consumer upgrades could be drivers of the recovery of the Taiwanese ICT industry. Private consumption expenditures (50% of H1 2023 GDP) were the main growth driver in the first half of 2023, with a 9.1 % increase compared to the year-earlier level. High savings build-ups during the pandemic and consumption vouchers issued by the government drove the increase. Thanks to significant job creation in the services sector, the unemployment rate reached its lowest in August since January 2001 (3.4% s.a.). Job market resiliency along with the minimum wage hike scheduled for January 2024 (+4.05 % monthly and +3.9 % hourly) will continue to support households spending. However, the island is heavily dependent on external energy prices since it relies on imports for more than 95% of its energy needs. Hence, a surge in global commodity prices could drive prices up, affecting private consumption. Moreover, the housing market worsened in 2023 as building permits and housing transactions plunged in the first half of 2023. A potential price correction through a fall in house prices could trigger a negative wealth effect, adding a further negative impact on household spending.
Légère augmentation du déficit budgétaire, qui est néanmoins minime
Les recettes annuelles du budget général du gouvernement central pour 2024 sont estimées à 2,709 milliards de NT$ et les dépenses annuelles sont fixées à 2,881 milliards de NT$, ce qui représente une augmentation respective de 5 % et 7,2 % par rapport à 2023. L'encours de la dette publique devrait augmenter, mais reste inférieur à la limite légale pour le gouvernement central (40,6 % du PIB), stipulée dans la loi taïwanaise sur la dette publique. Le budget est principalement alloué à la protection sociale (27,5 % du budget total), à la défense nationale (15 %) et à l'éducation, la science et la culture (19,5 %).
To tackle the ageing population issue, the government wants to implement policies (involving approximately 26% of social welfare expenses) aimed at encouraging births and developing long-term care services. National defence expenses are set to increase (+7.7 % compared to 2023) for the seventh consecutive year, amid rising tensions with mainland China. On 26 September 2023, Taiwan unveiled its first domestically built submarine “Narwhal” (NT$49.4 billion). The Tsai Ing-wen’s anti-nuclear party that has ruled Taiwan since 2016 is pursuing a nuclear-free energy agenda by 2025. Taiwan intends to generate 20% of its energy from renewable electricity, 30% from coal-fired power and 50% from gas-fired power. To implement this energy transition, in 2024, NT$27.3 billion has been allocated for the development of wind and solar power, and NT$34.7 billion are intended to strengthen power and energy storage systems. Another NT$6.7 billion has been allocated to encourage the use of electric vehicles. Compared to 2023, energy transition expenditures are expected to expand by 37%, the largest increase among all spending categories.
Les exportations ont été faibles en 2023, mais une baisse plus importante des importations - les exportations dépendent fortement des composants importés tels que les machines et les équipements électriques, qui représentent 45 % des importations totales - a permis au pays de conserver un excédent commercial. Nous prévoyons une reprise progressive pour les produits liés à la technologie en 2024 afin de soutenir la balance des comptes courants. Taïwan est resté le cinquième créancier net au monde à la fin de 2022, le total des actifs extérieurs ayant augmenté de 7,9 % pour atteindre 2,71 trillions de dollars, générant des revenus solides. Elle dispose de l'une des réserves de change les plus élevées au monde (564,01 milliards de dollars et 424 tonnes d'or en septembre 2023), ce qui lui permet de couvrir plus de 19 mois d'importations. De plus, son faible niveau d'endettement extérieur (environ 26 % du PIB) ne met pas en péril la stabilité de la position extérieure de l'île.
Escalating geopolitical tensions
The 2024 Taiwanese general elections (scheduled for January 13, 2024) are fast approaching. The Democratic Progressive Party (DPP) has a comfortable lead in the polls. Lai Ching-te is running for the DPP given that incumbent President Tsai Ing-wen (elected in 2016 and 2020) is ineligible for a third term. The opposition is composed of Hou Yu-ih of the Kuomintang Party (KMT), Ko Wen-je (former mayor of Taipei from 2014 to 2022) of the Taiwan People's Party (TPP) and Terry Gou (founder and CEO of the assembler of iPhone Foxconn) as an independent.
L'un des principaux thèmes de ces élections est la relation du pays avec la Chine continentale. Le KMT, principal parti d'opposition, accuse le DPP de Tsai Ing-wen d'aggraver la situation en prônant l'indépendance de Taïwan. La Chine accélère le déploiement de missiles balistiques et, selon le ministère taïwanais de la défense, près de 380 avions de combat opéreront chaque mois autour de l'île en octobre 2023. De son côté, l'île a investi massivement dans les dépenses de défense. Si une confrontation se produisait, elle aurait un impact mondial important étant donné son rôle indispensable dans la chaîne d'approvisionnement mondiale en semi-conducteurs.
One of the main topics of these elections is the country’s relationship with mainland China. The KMT, the main opposition party, accuses Tsai Ing-wen's DPP of making the situation worse by advocating Taiwan independence. China is accelerating the deployment of ballistic missiles and according to the Taiwanese Ministry of Defence, almost 380 combat aircraft per month operated around the island in October 2023. The island, for its part, has invested massively in defence spending. If a confrontation occurs, it would have a significant global impact given its indispensable role in the global semiconductor supply chain.
