Dagong maintains AA- credit rating for Taiwan

Chinese credit rating agency Dagong Global Credit Rating on Wednesday announced that it will maintain its local and foreign currency credit ratings for Taiwan at AA-.

The agency also said it projected a stable outlook for Taiwan's credit ratings in the next one to two years, given the region's relatively high growth potential and strong external solvency.

In the short-term, Taiwan's regional growth will be buoyed by an economic recovery on the Chinese mainland, its major trade partner, although the world economic outlook remains grim, Dagong said.

The rating agency forecast a 3.2-percent annual growth rate for Taiwan in 2013.

In the long-term, economic ties with fast-growing Asian neighbors and industrial diversification and upgrading will provide momentum for Taiwan to maintain 4.5-percent growth on average, Dagong said.

But the agency warned of economic structural risks as a result of a large constant current account surplus.

Dagong forecast that deficit rates in Taiwan's local administrative departments will fall to 4 percent in 2013 as the economy improves. Their debt-to-GDP ratios will rise to 44 percent in the next two to three years before heading down, Dagong said.

The agency said Taiwan's ability to service external debt remains very high, as its abundant foreign exchange reserves will keep it well-prepared for external shocks.