The expansion of Taiwan's gross domestic product roughly matched the 2.75% seen the previous year, according to statistics agency data published Tuesday. The economy grew 3.38% in the final quarter of the year, faster than in the previous three-month period.
The trade tensions between Washington and Beijing led to more than 715 billion New Taiwan dollars ($23.85 billion) in inbound investment in 2019, as many Taiwanese manufacturers moved production home from China to avoid punitive U.S. tariffs.
The newly reelected President Tsai Ing-wen has touted the trade war as an opportunity to reduce Taiwan's economic reliance on China, the island's biggest trading partner. Her administration has offered returning companies incentives such as low interest rates and help in securing industrial space.
Key suppliers to Apple, Dell, and HP, such as Hon Hai Precision Industry (Foxconn), Pegatron, Quanta Computer, Compal Electronics and Inventec, were among the 169 companies that shifted some production back to Taiwan last year, according to the Economics Ministry. This created nearly 60,000 new jobs.
This rebasing of industry on the island helped the export-reliant economy surpass the three other "Asia Tigers" -- Singapore, Hong Kong and South Korea -- last year.
Singapore has been hurt by the trade war, with growth plummeting to 0.7% in 2019 from 3.1% the previous year. Protest-hit Hong Kong is estimated to have contracted more than 1%, and in data due Wednesday, South Korea's economy is forecast to have expanded 1.9% -- its slowest pace since 2009.
Japan's central bank projected on Tuesday that its economy grew 0.8% last year, while China grew at its slowest rate in 29 years.
But economists and business leaders warned of potential headwinds for Taiwan in 2020.
Roy Chun Lee, deputy director of the Taiwan World Trade Organization, told the Nikkei Asian Review that trade and geopolitical factors remain the biggest uncertainty for the global economy this year, despite a provisional truce between Washington and Beijing.
"We will have to wait until China further discloses what products it will buy more of from the U.S. We can then determine whether it will impact on Taiwan and other countries' exports."
Martin Wong, CEO of Compal, which makes Dell notebooks and iPads, told reporters ahead of the company's year-end party that the trade war threat remains despite the phase-one trade agreement.
"[While] our clients will not stop their plans of capacity diversification for safety... we will continue to invest in Taiwan and Vietnam this year," Wong said.
Gareth Leather, senior Asia economist at Capital Economics, sees strong exports helping Taiwan's economy to grow at a "decent rate" this year.
Leather warned, however, that the island's rapidly aging society is likely to constrain future expansion as the working-age population falls. He also expressed concern about ties between Beijing and the China-skeptic Tsai.
"Relations between China and Taiwan took a turn for the worse during Tsai's first term, and they have the potential to cause further disruption to the economy," he said.
Source: Nikkei Asian Review