Taiwan Country Risk Rating

Taiwan’s overall country risk score of medium-low reflects its economic strength and ongoing moderate tensions with China over reunification. The economic front is constructive with the AI boom still causing a surge in semiconductor chip production and exports, which likely means that growth will exceed the IMF forecast of 5.2% for 2026. Orders are solid for the next 6-18 months, as AI application revenue surges and fuels the multi-year demand for more AI computing capacity. Taiwan’s trade picture has also been helped by the agreement with the U.S. to reduce tariffs to 15% that has calmed tensions with the Trump administration. However, geopolitical uncertainty remains with ongoing grey warfare from China’s navy and air force. Additionally, since June China’s coastguard vessels have been radioing shipping for details of their destination port in Taiwan, which is a step towards China’s coastguard quarantining Taiwan or one of its islands. If further measures are taken by China’s coastguard, this could raise tension about Taiwan, though this should be viewed as an alternative to blockade or invasion. This will also be supplemented by encouraging reunification voices in Taiwan after the visit of the Kuomintang leader to meet President Xi in April and ahead of the crucial January 2028 Taiwan presidential and parliamentary elections. The Trump administration stance remains fluid with Trump sounding a cooler note in his May visit to China, but reports that a USD14bln arms package for Taiwan could come to the U.S. Senate in the coming months.