Fitch Ratings raised the sovereign ratings of Taiwan citing strong economic growth, improvement in the external sector and continued fiscal prudence.
The rating agency lifted the sovereign ratings to ‘AA’ from ‘AA-‘. The outlook on the ratings was ‘stable’.
The economy is projected to grow 3.3 percent in 2022, before moderating to 2.6 percent in 2023.
According to Fitch, the current account surplus will widen to 14.8 percent of GDP in 2021 from 14.2 percent in 2020, driven by strong merchandise exports and a collapse in outbound tourism.
The agency said Taiwan has a record of prudent fiscal management. In addition, the economy’s resilience during the pandemic has enabled the authorities to be modest in their use of fiscal stimulus, underscored by a general government deficit of just 1 percent in 2020.
The general government deficit is forecast to narrow to 0.7 percent in 2022 on continued revenue growth and a gradual unwinding of pandemic-related spending.
In the press release, Fitch referred Taiwan as a part of China in some places. The press release title said “Fitch Upgrades Taiwan, China to ‘AA’.”
Later, media reports said that the Taiwan government expressed sharp disapproval of Fitch’s action for calling the island a part of China.