Taipei: Fitch Ratings maintained Taiwan’s long-term sovereign credit rating at “AA” in its latest report, a rating that has remained unchanged since 2021 and reflects Taiwan’s sound fiscal discipline, the Ministry of Finance (MOF) said.

According to Focus Taiwan, the report highlighted several key factors supporting the rating, including Taiwan’s significant net external creditor position, strong fiscal governance, and competitive business environment. In 2024, Taiwan’s total tax revenue outperformed expectations while government spending remained slightly below budget, resulting in a combined fiscal surplus (including special budgets) equal to 0.4 percent of GDP.

For 2025, Fitch forecast a marginal fiscal surplus, largely due to “revenue overperformance.” It also projected a steady decline in the government’s debt-GDP ratio to about 27 percent of GDP by 2027 from 31 percent in 2024, “reflecting low deficits and decent economic growth.”

The credit ratings agency also lauded Taiwan for keeping public debt well below the ceiling of 50 percent of GDP, which serves as an anchor for maintaining mid-term fiscal discipline. In terms of Taiwan’s net external creditor position, Fitch described “Taiwan’s external balance sheet” as “among the strongest of Fitch-rated peers globally.”

Taiwan had a net external creditor position of 214 percent of GDP as of the end of 2024, far higher than the “AA” median of 6.4 percent of GDP. Fitch projected Taiwan’s current account surplus to be around 15 percent of GDP from 2025 to 2027. However, these numbers have complicated tariff negotiations with the United States, which has objected to Taiwan’s large trade surpluses.

Fitch’s report highlighted potential impediments to growth, including U.S. tariffs. “Growth forecasts for 2H25 face large uncertainty, including the effect of U.S. tariffs. These are currently set at zero for semiconductors but are subject to a review under a Section 232 investigation by the U.S., while the ‘reciprocal’ rate is 20 percent,” the report stated.

Additional risks mentioned in the report include a slowdown for key trading partners, reduced global AI demand, and geopolitical tensions. Medium-term growth prospects also face challenges from an aging population.