FILE PHOTO: Containers are seen stacked up at Keelung port, northern Taiwan, October 30, 2015. REUTERS/Pichi Chuang/File Photo
September 16, 2019
TAIPEI (Reuters) – Taiwan’s central bank is expected to leave its policy rate steady for the thirteenth consecutive quarter, a Reuters poll of analysts showed, amid signs the export outlook may be slowly improving despite the escalating U.S.-China trade war.
All 15 economists polled said they expected the central bank to keep the benchmark discount rate <TWINTR=ECI> at 1.375%, where it has stood since June 2016, when its policy board meets on Thursday.
Like other trade-reliant Asian economies, Taiwan has been hurt by slowing global demand, particularly for its hi-tech products, and the prolonged trade dispute between its two largest trading partners, which has disrupted supply chains.
But export orders for July fell less than expected as retailers began stocking up on electronic gadgets ahead of the peak year-end shopping season, and actual exports unexpectedly returned to growth in August.
Last month, Taiwan’s government bucked a global trend of growth downgrades and raised its 2019 forecast, saying more companies were moving production to the island from mainland China to avoid higher tariffs from the trade war.
That returning production has helped Taiwan stand apart from other major regional exporters such as Hong Kong and Singapore, which are facing risks of recession.
“Better-than-expected growth performance will likely allow Taiwan’s central bank to keep rates unchanged through 2019-20,” DBS economist Ma Tieying said in a note, adding that “Made-in-Taiwan” was making a comeback after two decades of investment exodus and industrial hollowing out.
Higher interest rates could also lift the Taiwan dollar, hurting its export competitiveness.
Some analysts have cautioned, however, that recent signs of improvement are linked to the release of new smartphone models, which may provide only a temporary boost to orders.
(Poll compiled by Carol Lee; Reporting by Yimou Lee; Editing by Kim Coghill)
