Taiwan: Economy#

Taiwan has a dynamic capitalist economy with gradually decreasing government guidance on investment and foreign trade. Exports, led by electronics, machinery, and petrochemicals have provided the primary impetus for economic development. This heavy dependence on exports exposes the economy to fluctuations in world demand. Taiwan's diplomatic isolation, low birth rate, and rapidly aging population are other major long-term challenges.

Free trade agreements have proliferated in East Asia over the past several years. Following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand - Taipei’s first-ever with a country with which it does not maintain diplomatic relations - and, in November, inked a trade pact with Singapore. However, follow-on components of the ECFA, including a signed agreement on trade in services and negotiations on trade in goods and dispute resolution, have stalled. In early 2014, the government bowed to public demand and proposed a new law governing the oversight of cross-Strait agreements, before any additional deals with China are implemented; the legislature has yet to vote on such legislation, leaving the future of ECFA up in the air as of the conclusion of President MA's second and final term in May 2016. MA portrayed ECFA as Taiwan’s key to greater participation in East Asia’s free trade networks, and has also expressed interest in Taiwan joining the Trans-Pacific Partnership.

Taiwan's total fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labor shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 expected to account for nearly 20% of the island's total population by 2025.

The island runs a trade surplus, largely because of its surplus with China, and its foreign reserves are the world's fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland. In 2006 China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment on the island and has also secured greater market access for its investors in the mainland. In August 2012, the Taiwan Central Bank signed a memorandum of understanding (MOU) on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese Renminbi (RMB) and the New Taiwan Dollar across the Strait, which has helped Taiwan develop into a local RMB hub.

Closer economic links with the mainland bring opportunities for Taiwan’s economy but also pose challenges as political differences remain unresolved and China’s economic growth is slowing. Domestic economic issues loomed large in public debate ahead of the 16 January 2016 presidential and legislative elections, including concerns about stagnant wages, high housing prices, youth unemployment, job security, and financial security in retirement.

Economic Facts#

GDP (purchasing power parity)$1.125 trillion (2016 est.)
$1.115 trillion (2015 est.)
$1.107 trillion (2014 est.)
note: data are in 2016 dollars
GDP (official exchange rate)$519.1 billion (2015 est.)
GDP - real growth rate1% (2016 est.)
0.6% (2015 est.)
3.9% (2014 est.)
GDP - per capita (PPP)$47,800 (2016 est.)
$47,400 (2015 est.)
$47,300 (2014 est.)
note: data are in 2016 dollars
Gross national saving35.7% of GDP (2016 est.)
36.5% of GDP (2015 est.)
34.5% of GDP (2014 est.)
GDP - composition, by end usehousehold consumption: 52.7%
government consumption: 14.3%
investment in fixed capital: 20.6%
investment in inventories: 0.1%
exports of goods and services: 62.2%
imports of goods and services: -49.9% (2016 est.)
GDP - composition, by sector of originagriculture: 1.8%
industry: 36.1%
services: 62.1% (2016 est.)
Agriculture - productsrice, vegetables, fruit, tea, flowers; pigs, poultry; fish
Industrieselectronics, communications and information technology products, petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing, vehicles, consumer products, pharmaceuticals
Industrial production growth rate0.5% (2016 est.)
Labor force11.68 million (2016 est.)
Labor force - by occupationagriculture: 5%
industry: 36%
services: 59% (2015 est.)
Unemployment rate3.9% (2016 est.)
3.8% (2015 est.)
Population below poverty line1.5% (2012 est.)
Household income or consumption by percentage sharelowest 10%: 6.4%
highest 10%: 40.3% (2010)
Distribution of family income - Gini index33.6 (2014)
32.6 (2000)
Budgetrevenues: $80.8 billion
expenditures: $83.95 billion (2016 est.)
Taxes and other revenues15.6% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-0.6% of GDP (2016 est.)
Public debt32.7% of GDP (2016 est.)
32.7% of GDP (2015 est.)
note: data for central government
Fiscal yearcalendar year
Inflation rate (consumer prices)1.3% (2016 est.)
-0.3% (2015 est.)
Central bank discount rate1.63% (31 December 2015)
1.88% (31 December 2014)
Commercial bank prime lending rate2.7% (31 December 2016 est.)
2.83% (31 December 2015 est.)
Stock of narrow money$477.8 billion (31 December 2016 est.)
$462.5 billion (31 December 2015 est.)
Stock of broad money$1.246 trillion (31 December 2016 est.)
$1.206 trillion (31 December 2015 est.)
Stock of domestic credit$743.5 billion (31 December 2016 est.)
$734 billion (31 December 2015 est.)
Market value of publicly traded shares$741.1 billion (31 December 2015)
$847.8 billion (31 December 2014)
$818.7 billion (31 December 2013)
Current account balance$77.9 billion (2016 est.)
$76.17 billion (2015 est.)
Exports$314.8 billion (2016 est.)
$335.5 billion (2015 est.)
Exports - commoditiessemiconductors, petrochemicals, automobile/auto parts, ships, wireless communication equipment, flat display displays, steel, electronics, plastics, computers
Exports - partnersChina 27.1%, Hong Kong 13.2%, US 10.3%, Japan 6.4%, Singapore 4.4% (2012 est.)
Imports$248.7 billion (2016 est.)
$262.9 billion (2015 est.)
Imports - commoditiesoil/petroleum, semiconductors, natural gas, coal, steel, computers, wireless communication equipment, automobiles, fine chemicals, textiles
Imports - partnersJapan 17.6%, China 16.1%, US 9.5% (2012 est.)
Reserves of foreign exchange and gold$456.9 billion (31 December 2016 est.)
$430.7 billion (31 December 2015 est.)
Debt - external$155.4 billion (31 December 2016 est.)
$159 billion (31 December 2015 est.)
Stock of direct foreign investment - at home$74.64 billion (31 December 2016 est.)
$72.34 billion (31 December 2015 est.)
Stock of direct foreign investment - abroad$346.9 billion (31 December 2016 est.)
$336.1 billion (31 December 2015 est.)
Exchange ratesNew Taiwan dollars (TWD) per US dollar -
32.85 (2016 est.)
31.911 (2015 est.)
31.911 (2014 est.)
30.363 (2013 est.)
29.62 (2012 est.)