Taiwan’s economy is set for strong growth in 2021 after bucking a global downturn this year thanks to demand for its hi-tech products during the coronavirus pandemic and investment returning from China due to Sino-US trade friction . While growth is expected to return to much of the world next year, Taiwan is likely to be one of the few economies that expands in both 2020 and 2021. The government’s Directorate-General of Budget, Accounting and Statistics has forecast gross domestic product (GDP) to expand 2.54 per cent this year and 3.83 per cent next year, despite the global economic shocks from the Covid-19 pandemic. The self-ruled island is expected to enjoy brisk shipments of consumer electronics, including PCs, gaming devices, 5G mobile phones and computer chips, as lockdowns and fears over the spread of the coronavirus mean people go out less often, analysts and officials said. “Rising domestic production capacity, spurred by the continuing investment of dominant semiconductor manufacturing and reshoring companies, will support Taiwan’s export and investment growth,” the directorate-general said late last month in a statement. The government’s 2021 forecast is consistent with predictions from international economists. DBS Bank anticipates 4.2 per cent growth next year, while the International Monetary Fund estimates expansion of 3.2 per cent. Even after vaccines become readily available, a return to pre-pandemic life could be a way off, said Brady Wang, an analyst with Counterpoint Research in Taiwan. “Consumers are expected to increase their consumption of consumer electronics to compensate for their inability to spend freely on other [products], such as travel or social networking,” Wang said, adding 5G smartphone penetration is also expected to grow quickly globally next year. Taiwan has capped its Covid-19 caseload at 718 due to strict quarantine rules and contact tracing, averting the widespread business closures common in parts of the developed world. The island’s all-important tech manufacturers never missed a day of work. Taiwan-based Acer Inc., the world’s fifth-largest PC vendor by market share, foresees demand exceeding supply into the “foreseeable future”. At the other end of the scale, young Taiwanese tech firm Noodoe, which develops electric vehicle charging stations, is also positive about the business outlook. “A lot of people don’t realise that EV infrastructure is like building a house, very much like a construction project. It involves a lot of suppliers,” founder and chairman John Wang said. “It’s not impulse buying. You plan out the deployment two to three quarters ahead of time.” The technology is underpinned by cloud operating systems in addition to physical stations, all of which contribute to the island’s economy, Wang said. Meanwhile, Taiwanese investors continue diverting capital back home from China to skirt US import tariffs that have been imposed on Chinese goods since the beginning of the trade war in July 2018. To date, Washington has slapped US$550 billion worth of tariffs on made-in-China products. Taiwan has been the biggest beneficiary of the trade dispute and seen a “substantial” increase in exports sent to the United States, according to a United Nations Conference on Trade and Development report released in November. InvesTaiwan, a government agency, said in May that 23 companies since January had chosen to expand in Taiwan over an existing offshore base, including the. Their projects are worth NT$48.7 billion (US$1.6 billion). Taiwan tech exports to China jump amid US embargo on components The reshoring trend has “continued to play out” throughout the year, InvesTaiwan said last month. The value of Taiwan’s total exports has grown year on year every month since July, hitting a record US$32 billion in November , jumping 12 per cent from a year earlier, according to Ministry of Finance data. In particular, US-China friction has boosted exports of Taiwanese chips, displays and computer gear to the. Dozens of Chinese companies, including telecoms giant Huawei Technologies Co., have had access to critical American technology curbed after being added to a US entity list on national security grounds. Taiwan, which emerged as a global hi-tech hub in the 1980s, is shaping up as an alternative source for components that China does not yet have the capacity to manufacture . In an export category that includes display panels for PCs and phones, for example, companies in China last month placed 68.5 per cent of the US$2.27 billion in total orders – up nearly 16 per cent from October 2019. Exports of goods and services are expected to grow 3.38 per cent next year, according to the budget office. However, it warned of continued weak consumer demand at home, where border closures have stopped international tourism. Private consumption is expected to contract 2.52 per cent this year, but return to expansion in 2021, the budget office said. Taiwan tech exports to China jump amid US embargo on components Tourism made up 5 per cent of Taiwan’s GDP in 2018, compared to manufacturing at 31 per cent, according to a report by the University of Nottingham’s Taiwan Studies Programme. Taiwanese companies that a year ago were focused on tourism are scrambling to create new domestic services instead, said Jamie Lin, chairman and partner with the AppWorks Ventures start-up accelerator in Taipei.