TAIPEI • Taiwan has announced an NT$882.4 billion (S$40.5 billion) stimulus package to boost its export-driven economy in the face of uncertainty from its two largest trading partners, the United States and China.

Taiwan's trade-reliant economy is showing signs of recovery, but it is highly vulnerable to protectionist policies from US President Donald Trump and increasing competition from Chinese manufacturers, as well as political tensions with Beijing.

The stimulus plan, which had been well flagged, will be spread over eight years and the infrastructure build-out will target rail, water, green energy and the digital economy, according to the government's proposal yesterday.

The plan has the potential to create around 40,000 to 50,000 jobs, the Cabinet said.

Just hours after Premier Lin Chuan unveiled the stimulus, which still requires parliamentary approval, Taiwan's central bank kept its key policy rate steady after its quarterly policy meeting, as widely expected. The central bank cited signs of an export-led economic recovery and mild inflation for its decision to stand pat.

But it also warned of uncertainties over US policy and risks from large and frequent flows of capital in and out of Taiwan, which it said was affecting its financial markets.

Taiwan's official statistician has forecast growth this year to rise to 1.92 per cent, a three-year high.

REUTERS