The Taiwanese Economy in August 2026

The global economy continues to grow moderately, though performance varies across major economies. US domestic demand remains resilient, and the Eurozone and Japan are also holding up, while China's domestic demand stays weak. Escalating tensions in the Middle East have added uncertainty to energy supply, pushing up oil prices and shipping costs; meanwhile, inflationary pressures have pushed major central banks toward tighter monetary policy. Going forward, attention should remain on geopolitical effects on energy prices, and on how major central banks' policies affect capital flows and financial markets.
Domestically, as international brands enter peak stocking season for new phone models, demand for related electronics has stayed strong. However, the widening US–Iran conflict, shipping disruptions, and rising oil prices have raised both raw material costs and external uncertainty, making manufacturers more cautious about August conditions. Looking ahead, besides persistent Middle East geopolitical risk, the AI boom's push on memory and chip costs may also dampen consumer electronics demand, slightly weakening manufacturers' outlook.
In services, retail was buoyed by summer travel, hot-weather spending, and holiday stocking, keeping business conditions active. Banking was supported by net interest margin income and investment/wealth management business, but performance weakened due to lower dividend income, higher bad-debt provisions, and a high base last month. Insurance saw premium income decline as investment-linked policy sales cooled and property/casualty insurance entered its off-season; however, Taiwan's stock market rally and dividend income lifted investment returns, supporting overall profitability.
Construction still faces pressure from earthwork costs, labor shortages, and rising material prices, but conditions stayed steady in August on continued progress in tech-sector office/factory construction, major public infrastructure, urban renewal, and social housing; the six-month outlook remains fairly optimistic. In real estate, transaction momentum weakened notably in August due to credit controls, summer holidays, typhoons, and Ghost Month; but as the central bank eased some mortgage and land-loan restrictions, wait-and-see sentiment should ease, with owner-occupier demand remaining the main support ahead.
According to the Taiwan Institute of Economic Research (TIER), the August composite indicator fell from July across manufacturing, services, and construction. Manufacturing's decline was limited, suggesting a broadly unchanged outlook; services fell for a second straight month; and construction turned down after four straight months of gains.
First, in foreign trade, sustained demand for AI, high-performance computing, and cloud services, together with higher export prices, lifted August exports to a record monthly high of US$82.40 billion, up 41.0% YoY and marking 34 consecutive months of growth. Imports rose 44.3% YoY to US$60.10 billion, the third-highest monthly level on record, supported by the international division of labor in the AI supply chain, export-derived demand, and higher import prices. Compared with July, export growth accelerated from 32.9% to 41.0% and import growth from 37.4% to 44.3%, indicating renewed trade momentum. By category, imports of agricultural and industrial raw materials, capital equipment, and consumer goods increased 46.4%, 41.6%, and 40.5% YoY, respectively, reflecting the continued strength of the AI supply-chain division of labor and export-derived demand. However, semiconductor equipment import growth slowed from 39.0% in July to 7.3% in August, suggesting softer momentum in equipment imports. For January to August 2026, exports grew 44.2% YoY and imports 40.4%, widening the trade surplus to US$136.91 billion, up 63.5% YoY.
On prices, August CPI growth eased to 2.04% from a revised 2.52% in July, and core CPI eased to 2.30% from 2.36%, marking a clear slowdown. This mainly reflects a high base last year from typhoon- and rain-driven vegetable prices, causing vegetable prices to fall 21.64% YoY in August; food price growth fell from 2.49% to 0.79%, cutting its contribution to the overall index from 0.65 to 0.21 percentage points, offsetting continued gains in dining-out costs. Cumulative Jan–Aug CPI and PPI growth stood at 1.84% and 9.10%, respectively.
In the labor market, August unemployment was 3.41%, up 0.02 percentage points MoM but down 0.04 points YoY. Average total monthly earnings for domestic full-time employees in July 2026 were NT$74,827, up 8.08% YoY; regular earnings were NT$52,528, up 3.67% YoY. Adjusted for inflation, cumulative Jan–Jul real regular earnings per person rose 2.29% YoY, and real total earnings rose 4.14% YoY.
In domestic financial markets, the weighted average lending rate on new loans from Taiwan's five major banks rose to 2.187% in August from 2.167% in July. Global markets swung sharply in July on AI stock deleveraging and US–Iran conflict volatility; but in August, better-than-expected tech earnings and cooling US rate-hike expectations lifted risk appetite, rebounding the four major US indices. Buoyed by US strength, funds flowed back into Taiwan's AI and tech stocks with strong earnings; led by heavyweight electronics, the weighted index rebounded quickly after July's correction, closing August at 46,128.47 points, up 6.98% MoM, with average daily turnover of NT$947.83 billion. On the exchange rate, strong revenue from Taiwan's AI supply chain drove active foreign inflows and net buying of Taiwan stocks in August; the US Treasury's expanded bond buyback plan also lowered Treasury yields and weakened the US dollar, lifting the New Taiwan Dollar, which closed August at 31.666 per US dollar, up 1.98% MoM.

Business Survey Outcomes

The proportion of manufacturing firms that reported improved business conditions in the current survey period was 17.8%, a drop of 13.9 percentage points from 31.7% in the prior month. Conversely, the proportion of those reporting a deterioration was 27.5%, an increase of 12.0 percentage points from 15.5% in the prior month. The remaining 54.7% assessed business conditions as unchanged, a slight increase of 1.9 percentage points from 52.8% in the prior month.
Looking ahead, the share of manufacturers anticipating an improvement in business conditions over the next six months decreased 4.0 percentage points to 27.9% from 31.9% in the prior month. Conversely, the proportion of firms foreseeing a deterioration in business conditions was 16.9%, an increase of 1.3 percentage points from 15.6% in the prior month. Meanwhile, the share of manufacturing firms expecting business conditions to remain unchanged increased 2.7 percentage points to 55.2% from 52.5% in the prior month.
The Manufacturing Composite Indicator dipped 0.49 points to 100.73 in August 2026 from the revised July reading of 101.22. The Services Composite Indicator declined 1.19 points to 97.3 in August 2026 from the revised July reading of 98.49, representing its second consecutive month of decrease. The Construction Composite Indicator decreased 1.89 points to 108.34 in August 2026 from 110.23 in July, ending the fourth consecutive month of increase.

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 August survey and are expected to deteriorate over the next six months include:
Man-made Fibers Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing.

Manufacturers' sentiments that have been in decline in the August survey, but are expected to improve over the next six months include:
None.

Manufacturers' sentiments that have been in decline in the August survey and are expected to remain sluggish over the next six months include:
Edible Oil Manufacturing, Flour Milling and Grain Husking, Textiles Mills, Yarn Spinning Mills, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Chemical Products Manufacturing, Electrical Appliances and Housewares Manufacturing, Banks.

Manufacturers surveyed who felt the August outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing, Rubber Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing.

Manufacturers surveyed who felt the August outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Food, Frozen Food Manufacturing, Prepared Animal Feeds Manufacturing, Glass and Glass Products Manufacturing, Metal Dies, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electric Wires and Cables Manufacturing, Precision Instruments Manufacturing, Basic Civil Structure Construction, Insurance.

Manufacturers surveyed who felt the August outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Slaughtering, Fabric Mills, Leather, Fur and Allied Product Manufacturing, Paper Manufacturing, Printing, Plastics and Rubber Raw Materials, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Screw, Nut Manufacturing, Motor Parts Manufacturing, Education and Entertainment Articles Manufacturing, Transportation and Storage.

Manufacturers' sentiments that have improved in the August survey and is expected to deteriorate over the next six months include:
None.

Manufacturers' sentiments that have improved in the August survey and is expected to remain upbeat over the next six months include:
Soft Drink Manufacturing, Wood and Bamboo Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Electronic Machinery, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Retail Sales, Wholesale, Restaurants and Hotels.

Manufacturers' sentiments that have improved in the August survey and the trend is expected to continue for the next six months include:
Petroleum and Coal Products Manufacturing, Communications Equipment and Apparatus Manufacturing, Audio and Video Electronic Products Manufacturing, Securities, Telecommunication Services.