30 Sept 2021
Taiwan May See Order Transfers if China’s Power Outages Continue
The Index Today
If China’s power supply outages continue, the country may have to shift its export orders to Taiwan to prevent any disruption.
China has been struggling with major power cuts and disruptions after having to ration its electricity sources and boost coal supplies. The price of coal spiked to record highs as supply tightened and became scarce due to tougher emission standards.
Taiwan’s Central Bank Governor Yang Chin-long said to reporters, “If their exports are bad, there will be an order transfer effect for Taiwan.” The country’s central bank is also focusing on the effect the electricity shortage has on the financial markets.
However, Taiwan has been facing problems of its own in the past months with continuous drought-related outages and power shortages at hydroelectric plants. The country’s economy relies greatly on exports and technology which has been growing during the pandemic. According to data released by the bank, the economy grew by 6% this year. The Central Bank of Taiwan has increased its forecast for GDP for 2021 from 5.08% to 5.75%.
The benchmark interest rate has remained a record low since the pandemic began, but may be subject to change depending on monetary policies of the US and inflation hikes caused by Covid outbreaks. If US raises its interest rates, Taiwan may decide in its footsteps.