The two key economic challenges facing Tsai Ing-wen in her second and final term as Taiwan’s president are the deteriorating demographic outlook and the long-term decline in productivity growth. A combination of the trade war, which is leading some companies to re-shore production back to Taiwan, and advances in areas such as robotics and artificial intelligence, should help lead to a recovery in productivity growth over the coming years. However, this is unlikely to be enough to offset the drag from a falling working-age population. A slowdown in the rate of trend growth seems inevitable.
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