The Taiwanese Economy in July 2026

Amid the renewed U.S.-Iran conflict, increased volatility in international oil prices has disrupted global energy markets and heightened risks to supply chains, financial markets, and inflation. Still, robust growth in AI, high-performance computing, and cloud demand has partly offset these geopolitical shocks, sustaining growth in economies deeply integrated into the global tech value chain.
Domestically, despite strong AI-related demand, traditional manufacturers remained constrained by weak global demand, intensifying price competition from China, resource crowding-out, and transformation pressures. June exports softened slightly from May, leading manufacturers to adopt a more conservative, largely "unchanged" outlook. In services, retail benefited from the mid-year "618" sales campaign, rising summer travel demand, and delivery of backlogged vehicle orders, though the plum rain season weighed on physical foot traffic. The financial sector benefited from stronger lending, active equity trading, and wealth management growth, with a notably larger share of firms optimistic than pessimistic for the month.
Construction benefited from continued AI-driven plant and office construction and rollout of infrastructure projects, with conditions expected to keep improving through June and the next six months, despite labor shortages and rising costs. Real estate remained in consolidation, constrained by unrelaxed central bank credit controls and cautious bank lending, with the "Yuan-An 3.0" program expected to have minimal impact. Based on the Institute's enterprise survey and model estimates, the services and construction composite indicators rose further in June, while the manufacturing composite indicator reversed two months of gains and declined.
In this forecast update, strong AI, HPC, and cloud demand drove better-than-expected export, production, and sales performance in electronics and ICT products. Stable employment, rising wages and dividends, and wealth effects from strong H1 equity performance further boosted private consumption. Continued expansion of advanced semiconductor capacity and rising foreign tech investment in Taiwan reinforced both domestic and external demand. Accordingly, exports, private investment, and private consumption forecasts were all revised upward, raising Taiwan's 2026 GDP growth forecast from 7.56% (April) to 10.38%, up 2.82 percentage points. Unlike 2025, which was export-led, 2026 growth is expected to be more balanced, driven jointly by exports, investment, and consumption.
In foreign trade, AI, HPC, and cloud-driven demand plus higher export prices extended exports' positive streak to 32 months, with double-digit growth in both exports and imports. As base effects rose, June export growth eased to 40.3% from 51.7%, and import growth eased to 51.8% from 54.9%. Traditional goods diverged: machinery, electrical equipment, and minerals grew 14.8%–23.0%, while base metals and plastics/rubber products turned negative and chemicals grew only 4.5%. Capital equipment imports rose 65.9% on semiconductor equipment investment. H1 2026 exports grew 47.1% y/y and imports 40.3% y/y, yielding a trade surplus of USD 97.44 billion, up 74.9%.
On prices, heavy rain lifted vegetable prices 10.05% y/y. Recreation/education/culture and miscellaneous goods inflation widened, mainly due to the Dragon Boat Festival falling in June this year versus late May last year, which turned gift-money-related personal care service fees positive, compounded by rising overseas tour, computer, and educational equipment prices. Headline CPI rose from 2.20% (May) to 2.60% (June); core CPI rose from 2.12% to 2.45%; PPI rose from 14.44% to 15.10%. H1 2026 cumulative CPI was 1.70% and PPI was 6.41%.
In the labor market, H1 average unemployment was 3.31%, down 0.02 pp y/y. Workers on reduced-hours furlough fell to 2,897 by end-June 2026 (–863 from May) as some arrangements expired without renewal. Real regular wages rose 1.51% y/y and real total wages rose 1.34% y/y (Jan–May cumulative).
In domestic finance, the five major banks' (Bank of Taiwan, Taiwan Cooperative Bank, Land Bank of Taiwan, Hua Nan Bank, First Bank) weighted average new loan rate was 2.155% in June, down 0.053 pp from May's 2.208%. Equities pulled back in early June on Fed rate-hike expectations, Middle East tensions, and SpaceX's U.S. IPO crowding out funds, but rebounded after the U.S.-Iran ceasefire, falling oil prices, and NVIDIA server shipment news lifted tech and financial stocks. The TAIEX closed June at 46,125.91, up 3.11% m/m, with average daily turnover of NT$1.38387 trillion. The NT dollar weakened on Fed rate-hike expectations, closing June at NT$31.837/USD, down 1.42% from May.

Business Survey Outcomes

The proportion of manufacturing firms that reported improved business conditions in the current survey period was 18.9%, a decrease of 11.5 percentage points from 30.4% in the prior month. Conversely, the proportion of those reporting a deterioration was 24.0%, a slight increase of 0.4 percentage points from 23.6% in the prior month. The remaining 57.2% assessed business conditions as unchanged, an increase of 11.2 percentage points from 46.0% in the prior month.
Looking ahead, the share of manufacturers anticipating an improvement in business conditions over the next six months stood at 28.5%, slightly down 0.1 percentage points from 28.6% in the prior month. Similarly, the proportion of firms foreseeing a deterioration in business conditions was 14.8%, an increase of 0.2 percentage points from 14.6% in the prior month. Meanwhile, the share of manufacturing firms expecting business conditions to remain unchanged decreased 0.1 percentage points to 56.7% from 56.8% in the prior month.
The Manufacturing Composite Indicator fell 1.14 points to 98.39 in June 2026 from the revised May reading of 99.53, reversing its prior two consecutive months of increase and turning downward. The Services Composite Indicator rose 0.66 points to 100.12 in June 2026 from the revised May reading of 99.46, extending its increase for a fourth consecutive month to the highest level since August 2023. The Construction Composite Indicator rose 5.33 points to 108.20 in June 2026 from 102.87 in May, marking the third 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 June survey and are expected to deteriorate over the next six months include:
Yarn Spinning Mills, Bicycles Manufacturing.

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

Manufacturers' sentiments that have been in decline in the June survey and are expected to remain sluggish over the next six months include:
Plastics and Rubber Raw Materials, Chemical Products Manufacturing, Plastic Products Manufacturing, Cutlery and Tools Manufacturing.

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:
Edible Oil Manufacturing, Flour Milling and Grain Husking, Textiles Mills, Fabric Mills, Industrial Chemicals, Petrochemicals Manufacturing, Man-made Fibers Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Motor Vehicles Manufacturing, Motorcycles Parts Manufacturing.

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:
Food, Soft Drink Manufacturing, Prepared Animal Feeds Manufacturing, Glass and Glass Products Manufacturing, Metal Structure and Architectural Components Manufacturing, Electric Wires and Cables Manufacturing, Motorcycles Manufacturing, Precision Instruments Manufacturing, Retail Sales, Wholesale, Restaurants and Hotels.

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:
Slaughtering, Leather, Fur and Allied Product Manufacturing, Petroleum and Coal Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Parts Manufacturing, Bicycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Real Estate Investment.

Manufacturers' sentiments that have improved in the June survey and is expected to deteriorate over the next six months include:
Rubber Products Manufacturing.

Manufacturers' sentiments that have improved in the June survey and is expected to remain upbeat over the next six months include:
Manufacturing, Frozen Food Manufacturing, Paper Manufacturing, Machinery and Equipment Manufacturing and Repairing, Industrial Machinery, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electronic Machinery, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Construction, Basic Civil Structure Construction, Insurance.

Manufacturers' sentiments that have improved in the June survey and the trend is expected to continue for the next six months include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing, Printing, Electrical Appliances and Housewares Manufacturing, Communications Equipment and Apparatus Manufacturing, Banks, Securities, Telecommunication Services, Transportation and Storage.

Taiwan- Data and Forecast (24th July 2026)
NT$100 million, %