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By Crystal Hsu / Staff reporter
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Central bank yesterday welcomed S&P Global Ratings’ affirmation of Taiwan’s “AA+” sovereign credit rating, after the agency said the nation’s monetary policy remains sound and flexible, helping it withstand global economic and geopolitical uncertainty.
S&P kept Taiwan’s long-term rating at “AA+” with a stable outlook, citing strong external finances, solid fiscal fundamentals and ample monetary policy flexibility. These strengths provide buffers against external shocks such as energy price volatility and trade fragmentation, the agency said.
The central bank cited S&P as describing Taiwan’s monetary policy management as “sound,” noting its ability to maintain flexibility even amid abundant domestic liquidity.
A Taiwan national flag flutters near the Taipei 101 building at the National Dr. Sun Yat-Sen Memorial Hall in Taipei on May 7, 2023.
Taiwan’s inflation has remained low and stable over time, consistently among the lowest in Asia. S&P attributed this price stability to moderate domestic demand growth, along with government measures such as fuel subsidies and electricity price controls, which have helped cushion the economy from swings in global energy costs.
The agency also pointed to Taiwan’s flexible exchange rate regime, saying that smooth foreign exchange operations have helped absorb external shocks and limit financial volatility.
While S&P said geopolitical tensions remain a structural constraint on Taiwan’s credit profile, it added that such risks are unlikely to significantly disrupt the economy’s highly competitive manufacturing sector, which is deeply embedded in global technology supply chains.
Overall, S&P said Taiwan’s strong external position, fiscal discipline and policy flexibility leave it well placed to absorb shocks, even as the global economic environment grows increasingly fragmented and uncertain.
