The Taiwanese Economy in October 2025

The Trump-Xi meeting brought temporary relief to US-China relations, with export controls and tariff measures suspended for one year. This not only provides time for bilateral negotiations and supply chain adjustments but also helps alleviate short-term pressure on global economic momentum.
Domestically, strong demand for emerging technology applications, coupled with new consumer electronics products, drove exceptional export performance in information and communication products in October. However, traditional industries, including chemicals, steel, and metal products, remained weak, leading to a notable decline in manufacturers' optimism compared to the previous month. In the services sector, department store anniversary sales and extended holidays boosted foot traffic and dining and tourism demand, prompting retail and hospitality operators to view current conditions more favorably.
In construction, public works projects progressed smoothly in October, while reduced private residential construction volume kept the sector broadly stable. Looking ahead, the fourth quarter will enter the peak period for public works completion, with major projects scheduled to finish by the end of 2025. Combined with significantly increased public infrastructure budgets for 2026 and continued high-tech facility investments, momentum is expected to strengthen, and conditions should improve. For real estate, October saw the six major municipalities' transfer volume rise 5.7% month-over-month, driven by relaxed New Youth Housing loan terms, extended holding periods for upgraders, and stock market gains. While transaction volumes recovered modestly, overall levels remain subdued. Over the next six months, central bank credit controls and high property prices are likely to maintain this low-volume pattern until seller sentiment shifts.
According to our institute's survey results and model calculations, composite indicators for manufacturing, services, and construction all rose in October 2025. Manufacturing continued its upward trend, though with limited magnitude, suggesting sentiment remained unchanged from the previous month, while services rebounded after a brief one-month decline.
In external trade, October exports surged, with the annual growth rate jumping from 33.78% in September to 49.71%. Imports declined from 25.12% to 14.61%, though overall trade performance remained strong. This was primarily driven by sustained robust demand for artificial intelligence (AI) applications and pre-stocking for new consumer electronics, with information and audiovisual products' annual export growth leaping from double digits to 138.21% and electronic components rising to 27.69%. Excluding these two high-tech categories, traditional industry exports turned negative, highlighting the persistent divergence between high-tech and traditional sectors. On the import side, AI industry global division of labor and export multiplier effects kept electronic components imports elevated, reflecting sustained capital equipment procurement momentum. However, imports of chemicals, basic metals, and their products declined significantly, indicating relatively weak traditional industry demand. For January-October 2025, cumulative exports grew 31.80% year-over-year and imports 21.26%, with the trade surplus reaching USD 121.81 billion, up 83.16%.
Regarding prices, vegetable price growth turned negative due to last year's typhoon-elevated base. Despite a 15-day ban on hog transport and slaughter to prevent African swine fever, ample frozen pork supplies limited meat price fluctuations. Overall food price inflation declined from 2.64% in September to 2.02%, contributing 0.54 percentage points to the total index, down 0.17 percentage points from the previous month. Meanwhile, multiple October holidays drove up package tour and hotel accommodation costs, pushing recreation and culture inflation from 0.92% to 1.44%. Overall CPI inflation expanded from 1.25% in September to 1.48%, while core CPI rose from 1.46% to 1.84%. For January-October 2025, cumulative CPI inflation stood at 1.74% and PPI at -1.71%.
In financial markets, the weighted average lending rate of the five major domestic banks (Bank of Taiwan, Taiwan Cooperative Bank, Land Bank, Hua Nan Bank, and First Bank) rose to 2.187% in October from 2.120% in September, up 0.067 percentage points due to increases in both mortgage and working capital loan rates. In equities, continued optimism about AI technology applications attracted substantial capital inflows to AI-related blue chips, while expectations of easing US-China trade tensions drove Taiwan stocks to record highs led by these weighted stocks. The Taiwan Weighted Index closed October at 28,233.35 points, surging 9.34% from end-September, with average daily turnover of NTD 544.785 billion. For currencies, concerns that Japan's new government might continue accommodative monetary policy strengthened the US dollar index, while foreign investor net selling and capital outflows pressured the New Taiwan dollar to depreciate 0.91% to close October at 30.749 per US dollar.

Business Survey Outcomes

The proportion of manufacturing firms that perceived their business as better than expected in October was 14.70%, a drop of 7.5 percentage points compared to 22.2% in the previous month. Conversely, the proportion of those who perceived their business as worsening in the target month was 29.5%, representing a slight increase of 0.9 percentage points compared to the 28.6% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant in the target month was 55.8%, an increase of 6.6 percentage points compared to the 49.2% recorded in the previous month.
Looking ahead, the segment of manufacturers who anticipated an improvement in their business over the next six months stood at 15.6%, representing a decrease of 4.6 percentage points compared to the 20.2% recorded in September. Similarly, the proportion of firms foreseeing a deteriorating economic outlook was 31.8%, marking a decrease of 1.9 percentage points from the 33.7% reported one month earlier. Meanwhile, 52.6% of manufacturing firms perceived their business outlook as remaining constant over the next six months, up from 46.1% in the previous month, representing an increase of 6.5 percentage points.
The TIER Manufacturing Composite Indicator for October 2025 reached 91.37 points, an increase of 0.25 points from 91.12 in September. Though the upward trend has persisted for four consecutive months, this month's increase remained modest. In addition, the TIER Service Sector Composite Indicator for October 2025 reached 88.42 points, up 2.89 points from the revised September figure of 85.53. Lastly, the TIER Construction Sector Composite Indicator for October 2025 stood at 98.62 points, up 1.69 points from 96.93 in the previous month, continuing its upward trajectory for five consecutive months.

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 October survey and are expected to deteriorate over the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Petroleum and Coal Products Manufacturing, Plastic Products Manufacturing, Cutlery and Tools Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Education and Entertainment Articles Manufacturing.

● Manufacturers’ sentiments that have been in decline in the October survey, but are expected to improve over the next six months include:
Food, Frozen Food Manufacturing, Soft Drink Manufacturing, Fabric Mills, Securities.

● Manufacturers’ sentiments that have been in decline in the October survey and are expected to remain sluggish over the next six months include: Chemical Products Manufacturing, Rubber Products Manufacturing, Electrical Appliances and Housewares Manufacturing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Wholesale.

● Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Screw, Nut Manufacturing, Machinery and Equipment Manufacturing and Repairing, Real Estate Investment.

● Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Slaughtering, Edible Oil Manufacturing, Flour Milling and Grain Husking, Leather, Fur and Allied Product Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Precision Instruments Manufacturing, Basic Civil Structure Construction.

● Manufacturers surveyed who felt the October 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, Textiles Mills, Yarn Spinning Mills, Wood and Bamboo Products Manufacturing, Paper Manufacturing, Printing, Man-made Fibers Manufacturing, Non-metallic Mineral Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Metal Structure and Architectural Components Manufacturing, Industrial Machinery, Electrical Machinery, Electric Wires and Cables Manufacturing, Communications Equipment and Apparatus Manufacturing, Motor Parts Manufacturing, Construction.

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

● Manufacturers’ sentiments that have improved in the October survey and is expected to remain upbeat over the next six months include:
Electronic Machinery, Electronic Parts and Components Manufacturing, Retail Sales, Banks, Insurance.

● Manufacturers’ sentiments that have improved in the October survey and the trend is expected to continue for the next six months include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Restaurants and Hotels, Telecommunication Services, Transportation and Storage.