Technology exports drive growth for Taiwan
Aug 07, 2020

Despite the ongoing COVID-19 pandemic causing havoc all over the world, some countries, sectors and economies have done better than other due to the inherent nature of their businesses. While sectors like travel, retail, entertainment, food and beverages and so on have been hit hard as people cannot step out of their homes and spend money, other sectors have done extremely well as demand rises. Healthcare is obviously one such sector, with masks and sanitizers becoming essential commodities, while online services have seen booming demand. Streaming sites such as Netflix, for example, have seen their subscriber base increase by huge margins over the last few months as more and more people look for entertainment options, while gaming has also become very popular.

Thus, in addition, while online services have become popular, the devices and infrastructure which allow those services to be accessed have also seen their demand increase. Internet providers have been reporting record bandwidth usage, while mobile companies are also seeing their data loads spike, especially in countries like India where the majority of people access the internet through their phones. In fact, YouTube had announced that it would be restricting the quality of videos on mobile phones to 480p to control bandwidth and network usage, due to the surge in usage over this time period.

We have also seen laptop and computer sales increase, as more and more people need to work from home, and also to satisfy needs to play new casino online for example. This is a two-fold effect, where the closure of casinos has meant that people have needed laptops or PCs to log onto online casino websites which can offer live casino games. Thus, both the online casino industry and laptop manufacturers will have seen a spike in demand.

This has had an impact on many countries and sectors, with Taiwan being one of them. It has been reported that the Taiwanese economy likely grew by 1.7% over the last quarter, with technology exports driving a large part of this growth. ANZ, one of the leading banks in Australia and New Zealand, has stated that this export growth was a prime driver of the country’s economic performance, and that the government is also focusing its investment efforts in this sector. This performance means that Taiwan is dealing with the economic effects of the pandemic in much better shape than other surrounding countries. Additionally, the ongoing tech disputes between the USA and China could lead to further opportunities for Taiwanese tech companies, as they are already part of the Asian supply chain, and have a leading position in technology.

It has been interesting to note how Taiwanese exports have been more resilient to the ongoing pandemic than those of South Korea, which is a comparable leader in the tech space. Taiwan’s exports increased by 0.5% over the first half of the year, making it the only Asian country to log positive export growth during this period. Tech exports were the largest contributor, growing by almost 16% while non-tech exports increased by a little over 14%.

Investment was the leading contributor to economic performance over the quarter, with gross fixed capital formation (GFCF) adding 1.4%. It is expected that the economy will grow by 1.6% over the year, with investment contributing over 1% to this. The recovery in the semiconductor sector, as well as the continued rollout of 5G networks globally, have benefited Taiwan, as this will boost demand for these products and services and keep it buoyant throughout the rest of the year as well.