Economic Analysis - 2018 Budget: Strengthening And Complementing Existing Development Schemes - JAN 2018


BMI View: Taiwan ' s proposed 2018 budget is expansionary and builds on existing development plans that are aimed at shifting the economy away from its overreliance on the export sector. Although expansionary in nature, the government remains aware of the need to adhere to fiscal discipline and we forecast the budget deficit to come in at 1.0% of GDP amid strong revenue growth and targeted government spending.

We believe that the Tsai Ing-wen administration remains committed to fiscal discipline despite the budget being an expansionary one and we forecast the budget deficit to come in at 1.0% of GDP, which is largely in line with the government's target of 1.1%. The budget seeks to strengthen and complement existing development plans such as the Forward-Looking Infrastructure Development Programme, which seeks to improve the economy's physical and digital connectivity. We believe that these programmes will be positive for the government's efforts to develop alternative drivers of economic growth as part of its broader plan to shift Taiwan away from its overreliance on the export sector. In addition, the government's measures to curb unnecessary spending amid strong revenue growth should be positive for its budget position.

Initiatives Aimed At Further Developing Existing Projects

Fiscal Deficit To Remain Modest
Taiwan - Budget Balance, % Of GDP
Taiwan Statistical Bureau, BMI

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