The Taiwanese Economy in June 2025

Since the beginning of this year, driven by the Trump administration's new policies, economic policy uncertainty in the United States has risen significantly, undermining business and consumer confidence in the outlook. Rising trade protectionism and tariff policy uncertainty have also impacted global trade performance, suppressed investment and consumption momentum while exacerbated global economic downside risks. Fortunately, tariff agreements between the United States and other countries have gradually become clearer recently, helping to reduce market uncertainty and slightly improving the global economic outlook compared to earlier projections.
On the domestic front, despite strong demand for AI, high-performance computing, and cloud-related services, the appreciation of the New Taiwan Dollar has suppressed the revenue performance of some domestic companies when calculated in NT dollars. Combined with weak demand for traditional goods and ongoing low-price competition from overseas competitors, manufacturing firms maintain a conservative outlook on current economic conditions. The service sector has benefited from the summer travel peak season and the approaching deadline for U.S. tariff relief measures, boosting passenger and freight transport demand. Additionally, the outstanding performance of Taiwan's stock market in June has led transportation, warehousing, and financial service providers to view current economic conditions favorably.
The construction industry has benefited from the advancement of technology office buildings, accelerated public works projects, and residential project revenues, with economic conditions improving in June. Looking ahead, driven by post-disaster reconstruction and energy transition projects, economic conditions are expected to continue recovering. However, while the real estate sector has seen increased transaction volumes due to a wave of property deliveries, mortgage restrictions and tightened funding continue to suppress buying interest. The housing market is expected to continue its correction in the short term, with demand primarily driven by owner-occupiers. Based on our institute's business survey results and model calculations, although the June manufacturing composite indicators continued its declining trend, the magnitude of change was limited, indicating that manufacturing sentiment remains unchanged compared to the previous month. The service and construction composite indicators ended their five consecutive months of decline and turned upward.
In this macroeconomic forecast update, although U.S. tariff policies still pose potential risks, benefiting from the temporary suspension of reciprocal tariffs, front-loading effects provided significant support in the first half of the year, pushing external demand performance above expectations and driving private investment momentum. The first-half GDP growth rate is estimated to potentially exceed 5%. However, as front-loading momentum gradually weakens in the second half and corporate profits face pressure, this may affect private investment and consumption willingness, with the second-half GDP growth rate expected to fall below 1%.
Overall, considering that first-half external demand and private investment performance exceeded expectations while private consumption momentum remained relatively weak, this forecast revision involves downward adjustments to private consumption and upward revisions to external demand and private investment. Taiwan's economic growth in 2025 is expected to follow a "high-early, low-later" development pattern, with full-year GDP growth estimated at 3.02%, an upward revision of 0.11 percentage points from the April forecast.
Regarding foreign trade, driven by emerging technology application trends and the approaching deadline for U.S. reciprocal tariff buffer periods, customers have accelerated their procurement, maintaining double-digit growth in both import and export growth rates. However, with rising base effects, June's export growth rate declined from 38.62% in the previous month to 33.71%, while the import growth rate also fell from 25.00% to 17.26%. Among major export commodities, strong demand for artificial intelligence and high-performance computing has kept growth rates for information and communication products and electronic components at high levels, but traditional industries such as machinery, basic metals, plastics and rubber, and chemicals have shown weak performance, with growth rates declining or turning negative. On the import side, emerging technology-related demand has supported high growth in electronic components and information and communication product imports, while other traditional industry imports remain sluggish. Cumulative first-half 2025 exports grew 25.92% compared to the same period last year, with imports growing 20.49%. Total first-half 2025 trade surplus reached $55.71 billion, growing 54.31%.
In terms of domestic production, benefiting from strong demand for artificial intelligence, high-performance computing, and cloud data services applications, the information and electronics industry continued to gain production momentum. However, some traditional industries continued production cuts due to poor market demand momentum, offsetting part of the increase. The June manufacturing production index was 112.11, down 7.24% from the previous month and up 20.03% compared to the same month last year.
Regarding domestic consumption, affected by economic uncertainty, public consumption has become more conservative. Combined with delayed deliveries of some imported vehicles, fewer holidays compared to the same period last year, and floor renovations by some retailers, automotive retail declined 17.31% year-on-year, textile and clothing retail fell 6.29%, and department stores decreased 3.56%. However, due to the different timing of the Dragon Boat Festival and fewer holiday days than the same month last year, restaurant industry revenue growth turned from positive to negative under a high comparison base. Cumulative first-half restaurant industry’s revenue increased 3.02% compared to the same period last year.
Regarding prices, except for vegetable prices rebounding due to base effects, other food price declining trends were clear, causing food price growth to narrow from 3.09% in May to 2.82% in June, contributing 0.77 percentage points to the overall index, 0.07 percentage points less than the previous month.
In the labor market, coinciding with graduation season, the number of first-time job seekers increased significantly compared to the previous month. The unemployment rate in June 2025 was 3.36%, up 0.06 percentage points from the previous month and down 0.03 percentage points from the same month last year. The average unemployment rate for the first half of this year was 3.33%, down 0.03 percentage points from the same period last year. Regarding wages, total wages for domestic full-time employees in May were NT$65,542, up 7.11% year-on-year. Average regular wages in May were NT$50,483, up 2.99% year-on-year. After adjusting for inflation, the average real regular wages from January to May 2025 were NT$46,039, up 1.17% year-on-year, with cumulative real total wages from January to May reaching NT$331,960, up 1.71% year-on-year.
In the domestic financial market, the funding environment remained stable. In June 2025, the highest overnight interbank lending rate was 0.828%, the lowest was 0.818%, and the weighted average rate was 0.823%, up 0.003 percentage points from the previous month and 0.004 percentage points higher than the same month in 2024. In the stock market, as Middle East tensions eased and international market sentiment turned optimistic, combined with strong U.S. technology stock performance driving Taiwan's technology stocks higher, the Taiwan Weighted Index closed at 22,256.02 points at the end of June, up 4.26%, with an average daily trading volume of NT$370.549 billion. Regarding exchange rates, U.S. inflation came in below expectations, heating up market expectations for Federal Reserve rate cuts. Simultaneously, easing Middle East tensions and U.S. dollar weakness drove substantial foreign capital inflows into Taiwan stocks, pushing up the NT dollar exchange rate, which closed at NT$29.902 per U.S. dollar at the end of June, appreciating 0.09%.

Business Survey Outcomes

The proportion of manufacturing firms that perceived their business as better than expected in June was 9.4%, a decrease of 1.0 percentage points compared to 10.4% in the previous month. On the other hand, the proportion of those who perceived their business as worsening in the target month was 37.9%, a slight increase of 0.1 percentage points compared to the 37.8% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant in the target month was 52.7%, edging up 0.9 percentage points compared to the 51.8% recorded in the previous month.
Furthermore, in the target month, the segment of manufacturers who anticipated an improvement in their business over the next six months stood at 22.0%, representing an increase of 2.5 percentage points compared to the 19.5% recorded in May. Conversely, the proportion of firms foreseeing a deteriorating economic outlook was 28.5%, marking a decline of 0.6 percentage points from the 29.1% reported one month earlier. Meanwhile, 49.4% of manufacturing firms perceived their business outlook as remaining constant over the next six months, a slight drop from 51.5% in the previous month. Overall, manufacturers hold a conservative view of the future economic outlook.
The TIER Manufacturing Composite Indicator for the target month in 2025, adjusted for seasonal factors, experienced a corrective decline. The index reached 85.88 points in June 2025, declining 0.04 points from 85.92, reflecting remaining constant sentiment among manufacturers.
In addition, the TIER Service Sector Composite Indicator for the target month in 2025 reaches 88.31 in June 2025, up 3.43 points from the revised May figure of 84.88, ending a five-month downward trend.
Lastly, the TIER Construction Sector Composite Indicator for June 2025, also adjusted for seasonal factors, stood at 94.79 points, up 4.54 points from 90.25 in the previous month, ending a five-month downward trend.

Analyses and Outlook of Industries

Following are manufacturers' sentiments that are industry-specific in the monthly TIER surveys:

Manufacturers’ sentiments that have been in decline in the June survey and are expected to deteriorate over the next six months include:
Paper Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Screw, Nut Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Bicycles Manufacturing, Bicycles Parts Manufacturing.
　
Manufacturers’ sentiments that have been in decline in the June survey, but are expected to improve over the next six months include:
Food, Soft Drink Manufacturing, Restaurants and Hotels.
　
Manufacturers’ sentiments that have been in decline in the June survey and are expected to remain sluggish over the next six months include:
Slaughtering, Printing, Rubber Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Metal Dies, Metal Structure and Architectural Components Manufacturing, Motor Parts Manufacturing, Real Estate Investment, Retail Sales, Wholesale.
　
Manufacturers surveyed who felt the June outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Man-made Fibers Manufacturing, Transport Equipment Manufacturing and Repairing.
　
Manufacturers surveyed who felt the June outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking, Wood and Bamboo Products Manufacturing, Electronic Machinery, Construction.
　
Manufacturers surveyed who felt the June outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Prepared Animal Feeds Manufacturing, Chemical Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Glass and Glass Products Manufacturing, Electrical Machinery, Electric Wires and Cables Manufacturing, Electrical Appliances and Housewares Manufacturing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Motor Vehicles Manufacturing, Telecommunication Services.
　
Manufacturers’ sentiments that have improved in the June survey and is expected to deteriorate over the next six months include:
Textiles Mills, Yarn Spinning Mills, Fabric Mills, Insurance.
　
Manufacturers’ sentiments that have improved in the June survey and is expected to remain upbeat over the next six months include:
Electrical Machinery, Supplies Manufacturing and Repairing, Basic Civil Structure Construction.
　
Manufacturers’ sentiments that have improved in the June survey and the trend is expected to continue for the next six months include:
Petroleum and Coal Products Manufacturing, Plastic Products Manufacturing, Communications Equipment and Apparatus Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Precision Instruments Manufacturing, Education and Entertainment Articles Manufacturing, Banks, Securities, Transportation and Storage.

TIER Forecast (issued on 25th July, 2025.)
(NT$100 million, %)