The “comeback” of the PC sector and steady demand for mobile devices means a solid year of economic growth for Taiwan, a new report says.
Taiwan’s economy is expected to grow at 3.27% in 2014, according to a report released by the Directorate General of Budget, Accounting and Statistics in July. This comes just over official government goals of 2.8% annual growth. These numbers were recently corroborated by data from a report by the Institute for Economic Research (Ifo) World Economic Survey released earlier this month. The group was optimistic about Taiwan’s prospects in the second half of the year.
In addition, Taiwan’s industrial economic production index — a barometer of how active the country’s factories are — hit new highs with a 6.08-percent growth year-on-year, according to the Ministry of Economic Affairs.
But for Taiwan, this growth comes with risks. Taiwan’s existential threat — the island’s only real cause for national security concern — comes from neighbouring China, which is also one of its biggest sources of growth given the country’s appetite for consumer electronics. Taiwanese manufacturing companies, which make up some of the largest private sector employers in China, have enjoyed solid yearly gains, but at the same time China could easily weaponize this market dependence.
More options than one
But China isn’t the only market with a demand for Taiwan’s exports. As a 2011 white paper from the American Chamber of Commerce in Taiwan argued, Taiwan needs to diversify its economic partnerships to lessen its reliance on hostile China. Fast growing South East Asia — the Philippines, Malaysia,Thailand, Indonesia and Cambodia — all have middle classes with rising income and a strong appetite for gadgets such as phablets, tablets and smart watches.
In addition, with the economy picking up in the United States and the EU, Taiwan could make a big push to build the brand of “Made in Taiwan” products in both of these markets. Consumers skeptical of “Made in China” products may be more inclined to buy Taiwan instead.
In the end economic liberalism is the best option for Taiwan. While security concerns stemming from neighbouring China may temper calls for complete laissez-faire public policy, Taiwan’s economy could make the rest of the developed world jealous by posting 4-5% annual growth.