Taiwan central bank seen leaving rates unchanged as growth outlook brightens

• All 15 economists polled said they expected the central bank to keep the benchmark discount rate  at 1.375pc.
• Taiwan was named in a U.N. study as the largest beneficiary of "trade diversion" amid the U.S.-China trade war.
• Higher interest rates could also lift the Taiwan dollar, hurting its export competitiveness.

TAIPEI: Taiwan's central bank is expected to leave its policy rate steady for the 14th consecutive quarter, a Reuters poll showed, as the export outlook slowly improves despite a protracted U.S.-China trade war.

All 15 economists polled said they expected the central bank to keep the benchmark discount rate  at 1.375pc, where it has stood since June 2016, when its policy board meets on Thursday.

Taiwan's manufacturers are a key part of the global supply chain for tech giants such as Apple and Huawei and its exports have been hit by both trade war disruptions and slowing global demand for hi-tech gadgets.

But Taiwan has bucked a regional trend of growth downgrades and in November raised its 2019, growth forecast to 2.64pc and predicted faster growth of 2.72pc next year, citing factory relocations to Taiwan from China to avoid higher tariffs from the trade war.

Taiwan was named in a U.N. study as the largest beneficiary of "trade diversion" amid the U.S.-China trade war.

The trade-reliant island's exports showed their strongest growth in more than a year in November amid signs of a pick-up in global demand for electronics.

"Although the growth outlook looks relatively positive next year, it's not positive enough to support a rate hike," said First Capital Management economist Liu Cheng-yu. "The central bank is likely to leave the policy rate unchanged."

Higher interest rates could also lift the Taiwan dollar, hurting its export competitiveness.

Some analysts have cautioned, however, that recent signs of export improvement could be short-lived, citing lingering concerns over demand for electronics and the trade negotiations between the United States and China, Taiwan's main trading partners.