Taiwan Has New Central Bank Chief, and Many Issues to Worry About in 2018
Taiwan’s decade stable central bank has chosen Yang Chin Long (Yang Jin Long 楊金龍), deputy governer since 2008, to replace Perng Fai Nan (Peng Huai Nan 彭淮南). This should provide continuity for a bank that has long considered price stability tantamount, superceding economic growth.
Taiwan’s economic growth, though, has been stable, especially considering the near zero population growth, forecasting 2.5 percent growth this year after 2.84 percent last year, according to Bloomberg. One thing to watch out for is the strength of the Taiwan dollar, which has been steadily encroaching on the US dollar, moving in 2016 from more than 33 NTD to the USD, to its current point, settling around 29 dollars to the USD. Taiwan continues to maintain massive foreign reserves, totalling $451.5 billion at end of last year. This is also a major driver of government revenue, with the central banks stewardship of these assets yielding billions per year in returns.
This dependency on foreign reserves, as well as the looming possibility of a US economic pullback should be a cause of concern. The supply chain and production of Apple products along represents a large sector of the Taiwanese economy, with the remaining extremely large tech sector with the likes of Asus, Acer, and HTC all being highly dependent on a resilient world economy for its exports of consumer electronics. A global economic downtown could have chilling effects.
For now though, the outlook is positive, and the foreign reserves should provide ample liquidity in the event of any financial crisis.
Staff Writer: Ari B