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Taiwan – why macro matters

Latest video, discussing one of my main themes: that Taiwan macro is more relevant for global investors than it has been for a long time.

Paul Cavey

• 1 min read
Taiwan – why macro matters

There is a lot going on in Taiwan macro:

  • I can't find another historical example of such a rich economy growing by 8% YoY, built on a manufacturing share that has rebounded to 35% of GDP.
  • Taiwan is small, but with a current account surplus of 25% of GDP, and a trade surplus with the US that is even bigger, it is still playing a role in global imbalances.
  • If chips are the new oil, then the Middle East isn't the only source of global inflation. Taiwan's electronics export prices are rising for the first time in 25 years.
  • Demographics are terrible everywhere in Asia. But with less labour market flexibility, they are biting more in Taiwan than elsewhere.
  • Before 2020, it was difficult for core CPI to rise above 0%. Now, it isn't falling below 2%. Rate rises have the potential to break the TWD out of the tight range it has traded in for the last 30 years.