Taiwan’s real economic growth is set to slow to +2% y/y in 2019 (after +2.6% in 2018). Exports are projected to grow at a slower pace due to weaker growth in global demand, continued tensions between China and the US and an inventory adjustment for semi-conductors. Domestic demand growth will be the main driver of economic growth.
Taiwan’s public finances are healthy by international standards. Government debt will likely be at 33% GDP in 2019. The 2019 budget is expansionary, with planned spending up +2.8% y/y. This will bring expenditures to a record TWD2.022tn in 2019 (c. 11% of GDP). The main focus will be infrastructure, social welfare and internet development.