CBC likely to hold monetary policy rate unchanged at 1.375 pct through 2020, says ANZ Research

The Central Bank of the Republic of the China (Taiwan) is expected to hold the monetary policy rate unchanged at 1.375 percent through 2020, according to the latest report from ANZ Research.

Taiwan’s GDP growth will remain robust in 2020 (ANZ forecast: 2.1), on the back of a pick-up in exports. Stable domestic demand along with robust external demand underpins our positive outlook.

Domestic demand is expected add 1.5ppt to headline growth, while net external demand will add 0.6ppt in 2020. In the wake of fragile US-China trade relations, Taiwan’s policymakers have focussed on attracting investment and encouraging domestic manufacturers to establish operations back home.

This realignment of the supply chain has enabled Taiwan to integrate more deeply in Asia’s value chain, the report added.

Government schemes have attracted approved investments worth USD27.5 billion, of which official estimates indicate USD7.6 billion to be committed to active projects by end 2019. These business-friendly policies place Taiwan in a position to reap benefit of tech sector revival.

"Manufacturing surveys and production trend point to an incipient recovery. We expect Taiwan’s domestic indicators for exports and production to advance in H1 2020. Subsequently, the durability of the tech sector recovery will underpin the momentum through H2 2020," ANZ Research further commented in the report.