TAIPEI (TVBS News) — Taiwan Central Bank Governor Yang Chin-long hinted at a new round of interest rate hikes in the first quarter of 2023, after raising interest rates by another 12.5 basis points in December this year.
Following a tumultuous global economic situation in 2022, analysts said that Taiwan's gross domestic product (GDP) growth is unlikely to reach 3% next year.
"Taiwan relies on exports, so the export orders in the first half of next year will be relatively poor," Darson Chiu said. The research fellow at the Taiwan Institute of Economic Research added that Taiwan's economic growth for the year may fall at about 2.2 to 2.8%.
Still, domestic markets may also see a resurgence as the pandemic situation stabilizes in Taiwan. According to the Taiwan Institute of Economic Research (TIER), the consumer price index (CPI) may rise 1.95% in 2023, down from the 2.93% predicted this year.
However, the Academia Sinica holds a more pessimistic view with predictions of the CPI rising 2.15% in 2023 due to inflation.
Experts also worry that as Taiwan's interest rate hikes closely follow the U.S., the spreads between the U.S. and Taiwan has widened, meaning that further hikes may greatly impact Taiwan as exports decline.
Still, Taiwan may see one, or even two silver linings in the beginning of the new year, experts say.
Nieh Chien-chung, a professor at Tamkang University's Department of Banking and Finance, pointed out that Russia and Ukraine have shown signs that peace talks may be on their agenda in the future, which could spell good news for global economies.
"The second silver lining is China's reopened borders," Nieh said. "Although the economy will be in disarray in the beginning, after the medium term, when everything is reinstated, they will get used to the so-called coexisting with the virus, and the economy will be good again."
With 2023 just around the corner, whether the tough economic situation in Taiwan due to soaring inflation will see the break of dawn remains to be seen.
