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Taiwan belongs to a group called the Four Asian Tigers, along with South Korea, Singapore, and Hong Kong. These regions experienced rapid industrialisation and high economic growth rates between the 1960s and the 1990s and later, they developed into high-income economies.
In 2020, despite the Covid-19 outbreak, Taiwan was the only Asian Tiger that reported positive gross domestic product (GDP) growth at 3.1%, ranking first in the Asia Pacific region. A year later, Taiwan’s GDP grew by 6.45%, which was the fastest pace since 2010. However, growth dropped to 2.5% in 2022 and 1.3% in 2023.
For 2024, the International Monetary Fund (IMF) expects Taiwan’s economy to expand by 3.1%.
Taiwan GDP Annual Growth Rate (in %)
The country has a total population of approximately 23.9 million. Taiwan was able to keep its unemployment rate relatively steady despite the pandemic. Unemployment slightly increased from 3.7% in 2019 to 4.0% in 2021, but decreased again to 3.7% in 2022. The IMF expects it to remain at this level in 2023 and 2024.
Taiwan Unemployment Rate (in %)
Taiwan’s economy has positioned itself as the world’s fourth-largest producer of electronics and the largest supplier of semiconductors.
Taiwan has also benefited from strengthening local consumption as well as domestic investment opportunities. Backed by its export-oriented and tech-reliant growth, experts suggest its economic outlook to stay resilient.
Currency and Central Bank
Taiwan’s official currency is the New Taiwan dollar or TWD, which is divided into ten dimes and 100 cents. Although, cents are almost never used in transactions. The TWD has been in circulation since 1949 after replacing the Old Taiwan dollar. The nation is also developing a central bank digital currency (CBDC).
The persistent global inflation is also affecting the Taiwan economy. IMF forecasts 1.9% for this year, after 2.5% inflation in 2023.
Taiwan Inflation (in %)
Industry and Trade
While the country is known for its semiconductor and electronics industries, Taiwan’s economy is still dominated by the services industry. The services sector accounted for more than 60% of Taiwan’s GDP in 2022, employing about 60% of the labour force.
The service sector is characterised by a lack of competitiveness. Moreover, large labour-intensive industries have started relocating from Taiwan to other countries with less labour costs.
On the other hand, its tourism industry is booming. In 2019, the country hit a record of 11.84 million foreign visitors. However, overseas travel in Taiwan was also impacted by the pandemic. In 2020, tourists brought only USD 1.8 bn into the country – eight times less than the previous year. This was also due to Taiwan’s strict Covid-19 entry restrictions which were in place until October 2022.
However, in 2023 the nation’s tourism bureau set a target of 6 million tourist arrivals in Taiwan which it achieved in mid-December.
Taiwan’s manufacturing sector comprises about 38% of the country’s GDP and provides jobs to 35% of the workforce. The country is one of the largest suppliers of semiconductors, computers, mobile phones, and computer screens in the world.
Taiwan’s imports and exports significantly depend on electrical machinery and equipment. Furthermore, Taiwan has a leading position in the export of semiconductors. China, the US, Hong Kong, and the UK were the top trading partners in 2023.
Taiwan Economy: Balance of Trade
Stock Exchanges and Capital Markets
The Taiwan Stock Exchange Corporation or TWSE was established in 1961 and has operated as Taiwan’s sole stock exchange since 1962. Trading takes place on the exchange between 9 a.m. and 1:30 p.m.
The Taiwan Capitalization Weighted Stock Index (TAIEX), more commonly known as the Taiwan Weighted, is the exchange’s main stock index. It covers all listed companies on the TWSE, except preferred stocks, full-delivery stocks, and newly listed stocks.
Taiwan Semiconductor Manufacturing Company (TSMC), MediaTek, Foxconn (Hon Hai Precision Industry), Chunghwa Telecom, and Quanta Computer are the largest Taiwanese companies in terms of market capitalization.
Bond Market
Taiwan’s bond market has been described to have contradictory tendencies. Although the market is large in size, the volume of transactions is often small. The types of bonds available in Taiwan’s capital market are government bonds, corporate bonds and financial debentures, beneficiary securities and asset-backed securities, foreign bonds and sustainability bond.
So-called Formosa bonds have become an attractive funding choice for overseas issuers recently. These bonds are issued in Taiwan but denominated in currencies other than the New Taiwan dollar.
Real Estate Market
In 2023, Taiwan’s housing market began to cool, due to a drop in demand and slowdown in residential construction activity.
However, Taipei continues to be one of the world’s most expensive cities and affordable housing is an issue. According to the country’s Ministry of Interior, Taipei’s house price-to-income ratio has risen sharply from just 6.4 in 2004 to about 16.2 in 2022.
Taiwan Housing Index (in %)
Source of charts: tradingeconomics.com
