Covid-19 has ravaged economies all over the world—but not Taiwan’s
Three years ago a prominent scholar declared that Taiwan’s economy was “on the brink of death”. The wording was extreme but the sentiment was widely shared. Taiwan faced a litany of seemingly intractable problems. Many of its best companies had moved to China; wages were stagnant; growth was grinding ever lower and the population was ageing rapidly.
Yet in 2020 Taiwan has turned the clock back: it is, again, one of the world’s fastest-growing economies. Granted, its gdp is projected to expand by only about 2% this year. But it is in rare company, with fewer than a dozen economies expected to grow at all, thanks to the coronavirus.
For the first time in decades, Taiwan’s economy may even grow faster than China’s.
Two factors tied to the pandemic help account for Taiwan’s relative success this year. First, it was the only country to contain covid-19 without sweeping closures of schools, offices and shops. Its government, alert to new diseases in China, started screening visitors from Wuhan at the end of 2019, as soon as reports emerged of a mysterious pneumonia outbreak. Thanks to fine- grained contact-tracing and near-universal mask-wearing, life has carried on more or less as normal.
Second, Taiwan’s manufacturers have been well-positioned to cater to global demand, such as it is. From tiny semiconductors to giant computer servers, electronics account for a third of
Taiwan’s exports.
Both these sources of out-performance will presumably fade when the pandemic ebbs. Taiwan has also, however, been a beneficiary of tensions between China and America. Taiwanese firms that had previously invested in China have shifted some of their operations back home, in order to avoid American tariffs. Those returning include Giant, a bicycle producer, Long Chen, a paper company, and Compal, a computer manufacturer. Investments in factories and other fixed assets in Taiwan reached an all-time high last year of over NT$4trn ($140bn), and are on track for a new record this year.
