TAIPEI (Taiwan News) — A Chinese invasion of Taiwan would cost the global economy US$10 trillion (Taiwan$311 trillion), equivalent to 10% of global GDP and higher than the Ukraine war, the COVID-19 pandemic and the 2009 global financial crisis, according to estimates by Bloomberg Economics.
The media simulated two scenarios: China invades Taiwan and draws the US into a regional war, or China imposes a blockade, cutting off Taiwan’s trade with the world. They used a model to project the impact on GDP, taking into account hits to semiconductor supplies, regional transport disruptions, trade sanctions and tariffs, and the impact on financial markets.
In the event of war breaking out in the Taiwan Strait:
Taiwan’s economy is expected to take a hard hit. A Bloomberg Economics survey, based on a recent similar war, predicts Taiwan’s GDP could fall by 40% in the first year. Both the human and economic costs are expected to be high, as Taiwan’s population and industrial base are concentrated on the coast.
GDP is expected to fall 16.7% in the first year due to a deterioration in China’s relations with its major trading partners and a loss of access to advanced semiconductors.
U.S. GDP is expected to fall 6.7% in the first year. Despite being far from the center of the conflict, the U.S. faces significant risks due to its reliance on Asian electronics supply chains, especially companies like Apple.
Global GDP is projected to fall by 10.2% in the first year, with South Korea, Japan and other East Asian economies expected to be hit the hardest.
If China blockaded Taiwan for a year:
Taiwan, a small, open economy that thrives through trade, is projected to see its GDP plummet 12.2 percent in the 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.
If war were to break out in the Taiwan Strait, the potential loss in global GDP could exceed that caused by the 2020 COVID-19 pandemic, the 2009 global financial crisis, the 1991 Gulf War, the 9/11 terrorist attacks on the United States in 2001 and the 2023 Israel-Hamas war, according to a Bloomberg Economics survey.
However, if Taiwan were to face a blockade, the resulting loss in global GDP would be between the levels observed during the Global Financial Crisis and the Gulf War.
