TAIPEI (Taiwan News) — US think tank Fitch Ratings gave Taiwan an “AA” financial rating score on Wednesday (Aug. 14), indicating sound fiscal discipline.

In a report published Wednesday, Fitch Ratings said, “Taiwan's ratings are underpinned by its exceptionally strong external finances, prudent fiscal management, high governance indicators, and competitive business environment.”

“These strengths are balanced by Taiwan's vulnerability to external demand shocks and abrupt shifts in global trade policy that could affect the technology sector and supply chains,” the think tank explained. It forecasts the 2024 general government deficit to remain modest at 0.8% of GDP.

Fitch Ratings added Taiwan has a high World Bank Governance Indicator rating at the 84th percentile. This reflects its long record of peaceful political transitions, effective rule of law, and low level of corruption, it said.

The Ministry of Finance (MOF) said Taiwan’s robust external financing, cautious fiscal management, strong governance, and competitive business environment are factors supporting the rating, per CNA. Taiwan’s overall tax revenue outperformed budget expectations, offsetting the government’s increased expenditures aimed at accelerating post-pandemic recovery, it explained.

The ministry said while the global economy is expected to see stable growth in 2024, it remains highly uncertain due to factors such as geopolitical risks, inflationary pressures, and the delayed effects of tightening monetary policies.