The Taiwanese Economy in July 2025

Despite resilient global Q2 growth and trade data, frequent U.S. tariff adjustments have caused significant distortions. Asian economies saw output surges from early client stockpiling, but this demand front-loading means greater correction pressures ahead, raising future downside risks.
Domestic industries show mixed performance. AI demand growth and the approaching U.S. tariff deadline drove client stockpiling, boosting July electronics orders and ICT exports. More electronics and machinery firms turned optimistic about current conditions. However, potential U.S. semiconductor tariffs reduced industry optimism for the next six months. Non-semiconductor traditional goods remain weak, with manufacturers staying conservative on current and future outlook. In services, Taiwan's stock recovery boosted investment confidence, with securities firms optimistic about July. But banks faced profit compression from weak property markets and lower provisioning and FX revenues, while insurers dealt with higher hedging costs. Both sectors remain conservative and increasingly pessimistic.
Construction turned recessionary in July as post-disaster rebuilding scattered labor and typhoons disrupted southern work sites. While public projects provide support, weak residential markets will limit growth. Real estate saw July housing deliveries boost monthly transactions in six major cities, though annual declines remained large. Property markets stay weak, and high supply levels may worsen residential supply-demand imbalances over six months.
According to our institute's survey results and model calculations, July manufacturing composite indicators ended five consecutive months of decline and turned upward, while service and construction composite indicators resumed downward trends after brief one-month recoveries.
For external trade, ongoing tech demand and extended U.S. tariff grace periods drove client stockpiling, keeping double-digit growth in imports and exports. July export growth rose from 33.73% to 41.98%, imports from 17.25% to 20.76%. AI applications boosted demand for high-end chips and servers. With the U.S. tariff deadline approaching, aggressive stockpiling maintained high growth for ICT products and electronic components. Machinery and electrical products also grew double-digit from semiconductor equipment demand. Other traditional exports remained weak. January-July 2025 exports grew 28.34% year-over-year, imports 20.53%. Trade surplus reached $70.062 billion, up 71.04%.
On prices, typhoons raised vegetable costs, pushing food price growth from 2.81% in June to 2.91% in July, contributing 0.79 percentage points to the overall index, up 0.02 points from last month. Transportation and communication categories saw smaller annual declines due to higher fuel base effects and rising transport fees. Overall July CPI growth expanded from 1.36% to 1.54%, core CPI from 1.46% to 1.70%. PPI fell from -5.35% to -6.44% as international prices dropped for petroleum, chemicals, metals, and electronics. January-July 2025 CPI averaged 1.87%, PPI -0.69%.
In labor markets, graduation season brought new graduates and summer workers into job searches, raising first-time job seekers. July 2025 unemployment reached 3.40%, up 0.04 points monthly, down 0.05 points yearly. January-July average was 3.34%, down 0.03 points from last year.
For domestic financial markets, July weighted average lending rates at five major banks reached 2.205%, up 0.019 points from June's 2.186%. Consumer loan rates fell slightly while other lending rates rose. In equities, markets watched trade negotiations as tariff exemptions neared expiration. Mid-month news of lifted NVIDIA chip sale restrictions and optimistic guidance from leading chip makers drove tech stock gains. Taiwan's index closed July at 23,542.52 points, up 5.78%, with average daily volume of NT$345.133 billion. For exchange rates, foreign inflows and stock purchases strengthened the NT dollar through mid-month. But dollar strength and caution over Taiwan-U.S. trade talks, plus corporate dividend outflows, limited gains. The NT dollar closed at 29.916 per USD, down 0.05%.

Business Survey Outcomes

The proportion of manufacturing firms that perceived their business as better than expected in July was 16%, a significant increase of 7.4 percentage points compared to 8.6% in the previous month. On the other hand, the proportion of those who perceived their business as worsening in the target month was 38.1%, a decrease of 1.1 percentage points compared to the 39.2% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant in the target month was 45.8%, down to 6.4 percentage points compared to the 52.2% 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 15.1%, representing a drop of 7.6 percentage points compared to the 22.7% recorded in June. Conversely, the proportion of firms foreseeing a deteriorating economic outlook was 32.1%, marking an increase of 1.8 percentage points from the 30.3% reported one month earlier. Meanwhile, 52.8% of manufacturing firms perceived their business outlook as remaining constant over the next six months, an increase of 5.9 percentage points from 46.9% in the previous month.
The TIER Manufacturing Composite Indicator for July 2025, adjusted for seasonal factors, experienced a modest increase. The index reached 86.80 points, rising 1.17 points from 85.63, ending five consecutive months of decline and turning upward.
The TIER Service Sector Composite Indicator reached 87.8 in July 2025, dipping 0.33 points from the revised June figure of 88.13.
The TIER Construction Sector Composite Indicator for July 2025 was 93.79 points, down 0.96 points from June's 94.75 points, ending the previous month's brief upturn and returning to a 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 July survey and are expected to deteriorate over the next six months include:
Paper Manufacturing, Cutlery and Tools Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Real Estate Investment, Insurance.
　
Manufacturers’ sentiments that have been in decline in the July survey, but are expected to improve over the next six months include:
None.
　
Manufacturers’ sentiments that have been in decline in the July survey and are expected to remain sluggish over the next six months include:
Textiles Mills, Yarn Spinning Mills, Fabric Mills, Man-made Fibers Manufacturing, Iron and Steel Basic Industries, Metal Structure and Architectural Components Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Construction, Basic Civil Structure Construction, Banks.
　
Manufacturers surveyed who felt the July 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, Plastics and Rubber Raw Materials, Fabricated Metal Products Manufacturing, Screw, Nut Manufacturing, Machinery and Equipment Manufacturing and Repairing, Industrial Machinery, Electrical Appliances and Housewares Manufacturing, Wholesale.
　
Manufacturers surveyed who felt the July outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Food, Edible Oil Manufacturing, Flour Milling and Grain Husking, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Wood and Bamboo Products Manufacturing, Restaurants and Hotels.
　
Manufacturers surveyed who felt the July outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Slaughtering, Prepared Animal Feeds Manufacturing, Printing, Rubber Products Manufacturing, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Metal Dies, Electrical Machinery, Electric Wires and Cables Manufacturing, Communications Equipment and Apparatus Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Telecommunication Services, Transportation and Storage.
　
Manufacturers’ sentiments that have improved in the July survey and is expected to deteriorate over the next six months include:
None.
　
Manufacturers’ sentiments that have improved in the July survey and is expected to remain upbeat over the next six months include:
Frozen Food Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Electronic Machinery, Electronic Parts and Components Manufacturing.
　
Manufacturers’ sentiments that have improved in the July survey and the trend is expected to continue for the next six months include:
Soft Drink Manufacturing, Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing, Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Audio and Video Electronic Products Manufacturing, Precision Instruments Manufacturing, Education and Entertainment Articles Manufacturing, Retail Sales, Securities.