S&P affirms Taiwan’s long-term sovereign ratings at ‘AA-‘

Taipei--U.S.-based Standard & Poor's Global Ratings has affirmed Taiwan's long-term sovereign ratings at 'AA-' and it was the 15th consecutive year for the agency to issue such a rating on Taiwan, according to the local central bank.

In a statement, the central bank said that since 2002, S&P has maintained Taiwan's long-term 'AA-'sovereign ratings. At the same time, the U.S.-based ratings agency has also maintained Taiwan's "stable" outlook.

In the latest action, S&P also affirmed 'A-1+' short term ratings for Taiwan.

Citing S&P, the central bank said that the latest ratings decision resulted from a wide range of consideration such as Taiwan's robust net external asset position, its flexible monetary policies and its dynamic private sector.

In addition, a moderate level of government debt has also led the ratings agency to maintain Taiwan's credit ratings.

"In this scenario, we expect modest general government fiscal deficits over the following three to four years. This expected fiscal performance should keep the level of net general government debt well below 60 percent of gross domestic product (GDP)," the ratings agency said.

S&P said that while Taiwan's financial system has been awash in liquidity, the country's central bank has adopted "strong monetary flexibility" and "sound monetary management" to keep low and stable growth in inflation, which has been one of the lowest among Asian countries.

The ratings agency said that Taiwan's inflation is expected to remain low and stable and the country's relatively flexible exchange rate for the Taiwan dollar also serves as a cushion against economic and financial shocks.

S&P said that the move to maintain the stable outlook for Taiwan reflected its expectations that the ties between Taiwan and China will remain conducive for a continued recovery in the island's economic performance.

Since the pro-independence Democratic Progressive Party took office in May 2016, the bilateral relationship across the Taiwan Strait has been affected because President Tsai Ing-wen (???) has declined to heed Beijing's calls to recognize the "1992 consensus" as the political foundation for cross-strait exchanges.

The "1992 consensus" refers to a tacit understanding reached in 1992 between China and Taiwan, which was then under the Kuomintang government, that there is only one China, with both sides free to interpret what that means.

"Although cross-strait relations have cooled since the current government took office, the negative impact on economic activities has been modest," the ratings agency said.

S&P said that Taiwan's GDP is expected to grow at a pace ranging between 2.0 percent and 2.5 percent over the next four years.

The growth forecast partly reflected increasing exports by Taiwan's dynamic and highly competitive information technology firms, the ratings agency said.

Source: Focus Taiwan News Channel