Taiwan’s investment grade rating remained at Aa3 while its credit outlook was upgraded from stable to positive by Moody's Investors Service Feb. 24.
 
According to a report issued by the U.S.-based credit agency, the change reflects Taiwan’s strong economic resilience and governance strength.
 
Taiwan’s export-oriented economy has benefited from high global demand for semiconductors, information and communication technology equipment, and electronic products, the report said.
 
The government’s successful management of COVID-19 and fiscal response to the pandemic also facilitated a rapid economic normalization, Moody’s said, adding that Taiwan’s economic fundamentals and policy flexibility enhance its ability to weather major external shocks.
 
In a statement, the Ministry of Finance welcomed Moody’s assessment, adding that this is the first time the agency has upgraded the credit outlook for Taiwan since it first issued the country’s sovereign credit rating in 1994.
 
The MOF said it will continue to implement relief and revitalization measures to ensure the country’s long-term economic stability and resiliency while exercising prudent management of national finances and launching incremental tax reforms.
 
Although Moody’s is bullish on Taiwan’s prospects, the agency also warned of its vulnerability to geopolitical risks, namely tensions with China and aging demographics.
 
Moody’s forecasts Taiwan’s fiscal deficit to decrease from an estimated 2.1 percent of GDP in 2020 to 1 percent in 2021. (DL-E)
 
Write to Taiwan Today at ttonline@mofa.gov.tw