Extract B states: 'Analysts warned that the latest figures supported the consensus that the downturn in Taiwan’s trade-dependent economy would persist...'

Using the data in the extracts and your knowledge of economics, evaluate policies which could be used to boost Taiwan's exports and increase its trade surplus.

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Extract B: Navigating headwinds in Taiwan's export-driven economy

Although GDP growth in Taiwan is projected to be around 2.1% in 2024, this is far below its long-term historical average, leaving the country with a persistent negative output gap. Recently, exports contracted for an eighth consecutive month, and core consumer prices have plateaued near zero. Some commentators are questioning whether the era of exceptional export-led growth for Taiwan is facing structural limitations.

Trade ministry data showed overall exports in October plunged 10.8% from a year earlier. Analysts warned that the latest figures supported the consensus that the downturn in Taiwan’s trade-dependent economy would persist into next year, likely requiring the central bank to ease monetary policy further. The central bank recently lowered its benchmark discount rate from 1.875% to 1.625%, the first reduction in several years, as cooling global demand and rising trade barriers damaged macroeconomic performance. However, government officials issued statements assuring the public that Asia's high-tech powerhouse is robust enough to avoid structural deflation.

Taiwan ranks as one of the world's premier exporters of advanced microchips and precision optical components. However, its trade position has been pressured by external shocks. Overseas shipments are heavily concentrated in semiconductors, which have suffered from cyclical swings in global consumer electronics demand. Taiwan has also faced complex geopolitical tensions in the region, affecting supply chains. Slowing growth in key trade partners, such as China and major Western economies, has further dampened demand.