Major Taiwanese news network Liberty Times Network (LTN) recently reported that S&P Global just upgraded Taiwan’s sovereign credit rating to AA+ with a “stable” outlook, thanks to the strong performance of Taiwan’s economy. After 21 years, Taiwan’s sovereign rating once again reached AA+. S&P explained that strong demand for Taiwan’s electronics exports drove the strong economic performance despite the pressure from rising geopolitical tensions. S&P expressed the belief that the Taiwan Strait issue will not seriously undermine Taiwan’s economic stability in the next three to five years. The rating will remain fairly balanced in the next year, and the structural demand for Taiwan’s semiconductor exports may offset the risks related to geopolitical tensions. However, geopolitical challenges still pose headwinds to Taiwan’s export-reliant economy. S&P did not believe this negative would be significant enough to derail Taiwan’s competitive manufacturing growth. Covid-19 has been driving the global acceleration of digital development, boosting Taiwan’s semiconductor exports. S&P also pointed out that Taiwan’s inflation rate has remained one of the lowest in Asia for quite a long time. This new rating adjustment was after S&P upgraded Taiwan’s sovereign rating from AA- to AA in April last year.
Source: LTN, April 29, 2022