Alicia García Herrero (Natixis) | With high inflation globally and supply chain disruptions in Mainland China, Taiwan will face more headwinds in growth. Even though the economic fundamentals are still supportive, the worsened environment can multiply risks in capital outflows and corporate profits.
Above all, the good news is exports and investment remain the strong pillars. With buoying global demand, Taiwan’s export grew 24% YoY in Q1 2022. There was also no sign of a sharp slowdown in export orders in March 2022, the period where the lockdowns began in Shanghai. Firms will mitigate such negative impact through production locally and in ASEAN, and the drag on the domestic economy is somewhat shielded. Foreign direct investment also grew 124% YoY, reflecting the popularity of manufacturing and wind farms from Europe and Japan.
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