Taiwan’s central bank (CB) revised up its growth outlook for the year amid signs the island’s export-dependent economy is bouncing back from the impact of the novel coronavirus pandemic, and left its policy rate unchanged as expected.

Export-dependent Taiwan has weathered the pandemic far better than many of its neighbours — it now has only 18 active cases — and its tech products have become highly sought after as people take to working from home around the world.

The central bank kept the benchmark discount rate at a record low of 1.125%, as expected by all 17 economists in a Reuters poll. It last cut rates in its quarterly meeting in March.

The central bank raised its 2020 forecast for gross domestic product (GDP) growth to 1.6% from 1.52% predicted in June, and said it saw next year’s growth at 3.28%.

“We have really good control of COVID-19. Compared to other countries, we are one of the few that has maintained positive economic growth,” bank governor Yang Chin-long told reporters, citing strong exports of semiconductors and telecommuting products in the first eight months of the year. Taiwan’s economy shrank 0.58% in the second quarter from a year earlier. But the central bank said it would return to growth in the second half, supported by rising exports and a series of stimulus programmes, which are expected to eventually total more than T$1 trillion ($34.33 billion).

“After the government launched economic stimulus programmes, domestic consumer confidence has recovered and retail sales revenue has returned to growth,” the central bank said in a statement.

“Since mid-year, exports growth has escalated thanks to hot external sales for electronics components and telecommunications products.”

Still, Fitch Ratings said shortly before the central bank meeting it saw full year growth at only 1%, while the Asian Development Bank (ADB) this week maintained its June forecast of 0.8% growth for Taiwan in 2020.

One area of concern for the central bank has been the strong Taiwan dollar, which has strengthened 2.7% against the US dollar this year, making its exports more expensive and feeding concern in Taiwan that the United States may label it a currency manipulator.

But Yang said there was good communication with the US Treasury, and that they sat down and talked with them about the issue every year.

The central bank also lowered its 2020 core inflation forecast to 0.24% from 0.36% predicted in June.

Reuters