The Taiwanese Economy in September 2026

Expanding global demand for AI infrastructure continues to underpin growth in major economies. However, frequent military conflicts in the Middle East have heightened energy supply risks and pushed up oil prices, intensifying inflationary pressures. Rising government bond yields in major economies have further raised financing costs, which may dampen investment and consumption. The impact is likely to be more pronounced for economies that rely heavily on energy imports and have benefited less from technology-sector growth, adding to downside risks to global growth.
Domestically, manufacturers turned more optimistic about business conditions in September, supported by continued global AI infrastructure expansion, strong inventory buildup for new products by international brands, higher petrochemical and plastic and rubber feedstock prices driven by rising oil prices, and a recovery in production and sales as some firms completed scheduled maintenance. Looking ahead, the unresolved Middle East conflict and soaring memory chip costs, which may weigh on consumer electronics demand, have made firms more cautious about the six-month outlook than in the previous survey.
In the services sector, the hospitality industry benefited from major exhibitions, festive dining, and robust tourism demand. However, some restaurant operators reported lower revenue than in the previous month due to store restructuring and a high base, resulting in mixed performance. In banking, rising U.S. Treasury yields and lower dividend income weighed on investment returns. Looking ahead, elevated financial market volatility and external uncertainty have kept the overall services outlook cautious.
In construction, despite high labor and material costs and squeezed profit margins, business conditions remained stable, supported by ongoing high-tech plant expansions, public infrastructure projects, and government-led urban renewal. The six-month outlook is also optimistic. In real estate, housing transactions rebounded in September as short-term disruptions from the summer holidays, typhoons, and Ghost Month faded, and deferred title transfers and new home handovers were completed. Looking ahead, although developers still face pressure from unsold inventory, the central bank’s moderate easing of two housing market controls at its September board meeting should boost demand among home upgraders and slightly ease pressure on developers regarding land acquisition and construction starts. In addition, AI-driven demand for factories and industrial office space, along with progress in commercial office, public urban renewal, and rail-related development projects, should support a gradual improvement in real estate conditions.
According to the Taiwan Institute of Economic Research (TIER), the September Composite Indicators for manufacturing and construction both turned upward, while the Services Composite Indicator declined for the third consecutive month. The Manufacturing Composite Indicator rose only slightly, suggesting that firms’ views on business conditions were largely unchanged from the previous month.
First, in foreign trade, exports reached a record monthly high of US$87.22 billion in September, up 60.9% year-on-year (YoY), driven by expanding demand for AI, high-performance computing, and cloud services, the traditional peak export season, inventory buildup for new consumer electronics, and higher product prices. Imports also hit a record US$63.59 billion, up 51.7% YoY, supported by the international division of labor in the AI supply chain, rising export-derived demand, and elevated commodity prices. Compared with August, export growth accelerated sharply from 41.0% to 60.9%, while import growth rose from 44.1% to 51.7%, indicating stronger trade momentum. By import category, growth in agricultural and industrial raw materials expanded markedly from 46.5% in August, led by strong demand for electronic components and computer parts, while semiconductor equipment import growth rebounded from 7.3% to 34.9%. For January–September 2026, exports and imports grew 46.2% and 41.3% YoY, respectively, and the trade surplus widened 63.8% to US$160.55 billion.
On prices, CPI inflation rose to 2.73% YoY in September from a revised 2.05% in August, and core CPI inflation increased from 2.31% to 2.52%. Inflationary pressures intensified as vegetable prices rebounded and price increases in energy, travel, and certain services persisted. PPI inflation rose to 18.12% YoY from a revised 17.39% in August, driven mainly by higher prices of petroleum and coal products, computer, electronic and optical products, chemical materials, and electronic components, as well as higher natural gas prices for power generation, partially offset by lower agricultural prices. For January–September 2026, CPI and PPI rose 1.94% and 10.16% YoY, respectively.
In the labor market, average total monthly earnings of full-time domestic employees were NT$69,520 in August 2026, up 6.64% YoY, while regular earnings were NT$52,523, up 3.28% YoY. Adjusted for inflation, average real regular earnings for January–August rose 1.35% YoY, and average real total earnings rose 2.61% YoY.
In domestic financial markets, strong August revenue from AI supply chain firms supported technology stocks. However, higher oil prices amid U.S.–Iran tensions, rising U.S. Treasury yields, and uncertainty over AI model development increased valuation pressure on tech stocks, causing the TAIEX to weaken temporarily. As the Fed’s September rate decision met market expectations and eased policy uncertainty, and Taiwan’s central bank further relaxed housing market controls, technology and construction stocks rebounded, lifting the TAIEX into positive territory. The TAIEX closed September at 47,940.13, up 3.93% from end-August, with average daily turnover of NT$881.18 billion. In the foreign exchange market, improved risk appetite following the Fed decision prompted foreign capital inflows, narrowing the NT dollar’s depreciation. The NT dollar closed at 31.852 per US dollar at end-September, down 0.58% from end-August.

Business Survey Outcomes

The proportion of manufacturing firms reporting improved business conditions in the current survey period was 26.8%, up 7.3 percentage points from 19.5% in the prior month. Conversely, the proportion reporting a deterioration was 20.3%, down 5.3 percentage points from 25.6% in the prior month. The remaining 52.9% assessed business conditions as unchanged, a slight decrease of 2.0 percentage points from 54.9% in the prior month.
Looking ahead, the share of manufacturers anticipating an improvement in business conditions over the next six months decreased by 3.1 percentage points to 24.0% from 27.1% in the prior month. By contrast, the proportion of firms expecting a deterioration rose by 1.8 percentage points to 19.8% from 18.0% in the prior month. Meanwhile, the share of manufacturing firms expecting business conditions to remain unchanged increased by 1.4 percentage points to 56.3% from 54.9% in the prior month.
The Manufacturing Composite Indicator increased by 0.50 points to 101.39 in September 2026 from a revised 100.89 in August. Given the limited change, manufacturers’ views on business conditions are assessed to be largely unchanged from the previous month. The Services Composite Indicator declined by 3.15 points to 92.65 in September 2026 from a revised 95.80 in August, marking its third consecutive monthly decline. The Construction Composite Indicator rose by 2.81 points to 110.42 in September 2026 from 107.61 in August, turning upward again.

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 September survey and are expected to deteriorate over the next six months include:
Bicycles Manufacturing, Securities.

Manufacturers' sentiments that have been in decline in the September survey, but are expected to improve over the next six months include:
Soft Drink Manufacturing, Electric Wires and Cables Manufacturing.

Manufacturers' sentiments that have been in decline in the September survey and are expected to remain sluggish over the next six months include:
Banks.

Manufacturers surveyed who felt the September outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Textiles Mills, Yarn Spinning Mills, Man-made Fibers Manufacturing.

Manufacturers surveyed who felt the September 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, Paper Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Precision Instruments Manufacturing, Restaurants and Hotels, Insurance.

Manufacturers surveyed who felt the September outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking, Fabric Mills, Printing, Rubber Products Manufacturing, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Electrical Appliances and Housewares Manufacturing, Communications Equipment and Apparatus Manufacturing, Education and Entertainment Articles Manufacturing, Transportation and Storage.

Manufacturers' sentiments that have improved in the September survey and is expected to deteriorate over the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing.

Manufacturers' sentiments that have improved in the September survey and is expected to remain upbeat over the next six months include:
Slaughtering, Wood and Bamboo Products Manufacturing, Glass and Glass Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electronic Machinery, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Construction, Basic Civil Structure Construction, Real Estate Investment, Retail Sales, Wholesale.

Manufacturers' sentiments that have improved in the September survey and the trend is expected to continue for the next six months include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Plastics and Rubber Raw Materials, Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Audio and Video Electronic Products Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Bicycles Parts Manufacturing, Telecommunication Services.