Credit rating agency S&P Global has maintained Taiwan’s long-term sovereign credit rating at AA+ with a stable outlook in its latest report, released on April 29.
Sovereign credit rating indicates a country’s credit worthiness and indicates a government’s ability to pay back debt. S&P Global is one of the three most influential global companies who give such independent assessment to market decision-makers.
The report states that although geopolitical tensions create pressure, they do not hinder Taiwan’s manufacturing growth. Amid rising energy prices, government measures also help keep inflation relatively low.
Taiwan’s Ministry of Finance said it will continue to prudently plan fiscal policies, promote stable economic and industrial development, and implement debt control to ensure fiscal stability.
S&P maintains Taiwan’s AA+ rating
According to a report by the Central News Agency, on April 29 Taiwan’s Ministry of Finance issued a press release stating that S&P confirmed it has maintained Taiwan’s sovereign credit rating at AA+ since its upgrade in 2022, with a “stable” outlook, recognizing Taiwan’s sound fiscal management and strong fiscal performance.
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“The stable outlook reflects our expectation that, over the next 24 months, structural demand for Taiwan’s semiconductor exports is likely to offset growth issues associated with longstanding geopolitical tensions and evolving trade settings,” the S&P said in its report.
The report noted that although government spending is increasing due to aging population pressures, defense needs, infrastructure expansion, and responses to global trade tensions, Taiwan benefits from record-high profits in its technology sector, with tax revenue growth exceeding expectations. The consolidated government fiscal surplus is projected to be 0.7 percent of GDP in 2025, while the 2026 budget projects a deficit of 0.9 percent of GDP.
S&P believes that growth in Taiwan’s overall government debt remains relatively moderate, estimated to reach 22.4 percent of GDP by the end of 2026, and is expected to remain broadly stable over the next three years, supporting the government’s strong fiscal performance.
S&P noted that global economic growth is expected to slow in 2026. However, sectors such as artificial intelligence, high-performance computing, 5G, big data analytics, and electric vehicles continue to grow strongly. Demand for Taiwan’s technology products is expected to remain high, and Taiwan’s long-term export outlook and economic growth prospects are still positive.
In addition, Taiwan’s leading position in advanced semiconductor manufacturing, solid fiscal condition, and strong net external asset position provide sufficient buffers to absorb shocks, which will help reduce the impact of uncertainty from U.S. tariff policies on economic growth.
Limited energy impact
The Central Bank of the Republic of China (Taiwan) stated in a press release on April 29 that credit rating agency S&P Global believes Taiwan’s strong net external asset position, solid fiscal fundamentals, and highly flexible monetary policy support its credit rating, even amid economic headwinds from energy crises and global trade uncertainty.
S&P said that although geopolitical tensions continue to exert pressure on Taiwan’s credit profile, they do not hinder the growth of Taiwan’s highly competitive manufacturing sector.
The report also noted that Taiwan’s central bank maintains highly flexible and well-managed monetary policies. Even with abundant liquidity in the domestic financial system, Taiwan’s inflation rate remains low and stable, historically among the lowest in Asia.
Despite rising energy prices, S&P noted that Taiwan is able to maintain a relatively low inflation rate due to moderate domestic demand growth, ongoing government fuel subsidies, and electricity price freeze measures. In addition, a relatively flexible New Taiwan dollar exchange rate and smooth foreign exchange market operations help ease economic and financial shocks.
MOF: Continue prudent planning to ensure fiscal stability
Taiwan’s Ministry of Finance stated that, in response to rapidly changing international economic conditions and geopolitical risks, it will continue to prudently plan fiscal measures, promote stable national economic and industrial development, and implement debt management to ensure fiscal soundness.
It aims to build strong fiscal resilience and lay the foundation for sustainable national development, jointly fostering an innovative and prosperous Taiwan.
In August 2025, Fitch Ratings affirmed Taiwan’s long-term sovereign credit rating at “AA,” with a stable outlook, maintaining the upgrade it made in 2021. It praised Taiwan’s prudent fiscal management and strong fiscal discipline. This reflects Taiwan’s strong external financial position, current account surplus, and cautious fiscal governance.
In April 2024, Moody’s Investors Service confirmed Taiwan’s sovereign credit rating at “Aa3” with a stable outlook.
Taiwan’s resilient economy
Overall, Taiwan’s sovereign credit ratings in recent years have remained at “AA” level or higher. Even amid geopolitical risks, Taiwan is regarded as a highly resilient economy due to its highly competitive technology supply chain and strong fiscal performance.
A sovereign credit rating refers to a comprehensive assessment by international credit rating agencies of a country’s central government’s ability and willingness to repay debt. It measures the risk of sovereign default on long-term obligations (typically over one year), reflecting the likelihood that a government will fail to meet its debt commitments. The main global agencies responsible for sovereign credit ratings are S&P Global, Moody’s Investors Service, and Fitch Ratings.
Credit rating agencies conduct comprehensive analyses based on several factors, including:
- Economic development, such as GDP growth rate and per capita income
- Fiscal performance, such as government revenue and expenditure balance, debt scale, and external debt structure
- Political stability, such as policy consistency and the government’s willingness and ability to honor obligations
- Monetary and financial policy, such as foreign exchange reserves and inflation control capability
Credit ratings are generally divided into “investment grade” and “speculative grade” (or “junk/high-risk grade”). The main rating symbols range from AAA to A levels within investment grade categories.
The higher a country’s credit rating, the lower its borrowing costs (interest rates) in international markets. Conversely, lower ratings lead to higher financing costs. International investors often use sovereign credit ratings as a key reference for assessing the risk of investing in a country’s bonds, which in turn influences global capital flows.
A country’s sovereign credit rating also typically serves as an upper limit benchmark for the credit ratings of domestic corporations or banks when they issue bonds overseas.
By Li Jingyao, Vision Times
