TAIPEI (Taiwan News) – China's invasion of Taiwan is expected to cost the global economy US$10 trillion (NT$311 trillion), equivalent to 10% of global GDP, the Ukraine war, COVID-19 pandemic, surpassing the 2009 global financial crisis. According to estimates by Bloomberg Economics.
The media company simulated two scenarios: one in which China invades Taiwan and draws the United States into a regional war, and the other in which China blocks Taiwan and cuts off trade between Taiwan and the rest of the world. The model was used to predict the impact on GDP, taking into account hits to semiconductor supplies, regional transportation disruptions, trade sanctions and tariffs, and the impact on financial markets.
If war breaks out in the Taiwan Strait:
Taiwan's economy is expected to be hit hard. A study by Bloomberg Economics estimates that Taiwan's GDP will plummet by 40% in the first year, based on recent similar wars. Because Taiwan's population and industrial base are concentrated along the coast, both human and economic costs are expected to be high.
Relations between China and its major trading partners will be disrupted, and access to advanced semiconductors will be disrupted. As a result, GDP is expected to fall by 16.7% in the first year.
US GDP is expected to decline by 6.7% in the first year. Despite being far from the epicenter of the conflict, the United States faces significant risks because of its dependence on Asia's electronic supply chain, particularly companies such as Apple.
Global GDP is expected to fall by 10.2% in the first year, with South Korea, Japan and other East Asian economies hit hardest.
If China locks down Taiwan for one year:
Taiwan, a small, open economy that thrives on trade, is expected to see its GDP plummet by 12.2% in its first year.
China, the United States, and global GDP are expected to decline by 8.9%, 3.3%, and 5%, respectively, in the first year.
According to a study by Bloomberg Economics, the potential global GDP loss if war broke out in the Taiwan Strait would be greater than the 2020 COVID-19 pandemic, the 2009 global financial crisis, the 1991 Gulf War, or the 2001 Gulf War. This could exceed the losses caused by the September 11 terrorist attacks in the United States in 2017. Terrorist attacks, and the 2023 Israel-Hamas war.
However, if Taiwan were to face a blockade, the resulting global GDP loss would fall somewhere between the levels observed during the global financial crisis and the Gulf War.
