The Taiwanese Economy in December 20244
The global manufacturing sector continues to exhibit a polarized performance. Strong demand persists in advanced semiconductor processes and server markets, while traditional industries are seeing only limited recovery. Recently, the U.S. new orders and production indices returned to expansion territory, indicating a mild recovery in demand. However, the Eurozone remains in contraction due to weak demand and heightened political uncertainty. In China, manufacturing activity has sustained expansion for three consecutive months, driven by government stimulus policies. Meanwhile, Japan has experienced six consecutive months of contraction, though the pace of deterioration has moderated.
On the domestic front, year-end seasonal demand and pre-Lunar New Year restocking have driven December indices upward. The service sector benefited from Christmas, and New Year's Eve celebrations, year-end banquets, and concerts, which spurred growth in dining and lodging demand, leading to optimistic wholesale, restaurants, and hotels sector performance for the month.
The construction sector experienced a surge from year-end public project deadlines and robust demand for semiconductor and green energy construction projects, bolstering confidence in both current and six-month outlooks. The real estate sector saw stabilization in December, supported by pre-Lunar New Year homebuying activity and increased property handovers. However, the market is expected to cool in the coming months due to funding constraints and high baseline property prices.
According to the Taiwan Institute of Economic Research (TIER), composite indicators for manufacturing, services, and construction rose in December 2024. The service and construction indices extended their three-month growth streak, while the manufacturing index recorded a second consecutive monthly increase. For 2025, Taiwan’s economic growth is projected to rely on investment and consumer spending, with external demand once again driving growth. TIER has revised its 2025 GDP growth forecast to 3.42%, up 0.27 percentage points from the 3.15% forecast in November 2024, due to stronger-than-expected investment and export performance.
In foreign trade, boosted by robust demand in AI and emerging applications, as well as pre-Lunar New Year shipping, exports of electronics and ICT products continued to grow year-on-year, though at a slower pace due to a high comparison base. December export growth slowed slightly to 9.19% from 9.68% in November. Imports surged, driven by strong demand for semiconductors and ICT products, with growth accelerating from 19.74% in November to 30.40% in December. For 2024, annual exports rose by 9.86%, while imports grew by 12.18%. Throughout 2024, Taiwan's annual trade surplus amounted to USD 80.625 billion, representing a decline of 0.20% compared to the previous year.
In the domestic production front, pre-Lunar New Year restocking and sustained momentum in the ICT sector pushed the December manufacturing production index to 109.01, a 6.21% month-on-month increase and a 20.79% year-on-year rise. Traditional industries showed mixed results, with machinery performing well but basic metals, chemicals, and automotive sectors still in decline. Annual industrial production grew by 11.45%, with manufacturing increasing by 11.93%.
Regarding domestic consumption, Ahead of the Lunar New Year, demand for household appliance upgrades and year-end banquet gifts boosted retail sales in ICT, home appliances, and e-commerce. Cold weather also drove winter clothing demand, while promotions and co-branded launches contributed to strong sales in fabric and apparel retail. Total retail sales in December reached NT$433.2 billion, a 2.92% year-on-year increase. The restaurant sector saw growth driven by Christmas and New Year's Eve dining, festive meal packages, and pre-Lunar New Year demand for banquets and festive dishes. December dining revenue reached NT$96 billion, up 4.42% year-on-year, contributing to an annual growth of 3.58%.
In December, the consumer price index (CPI) rose 2.10% year-on-year, slightly higher than November’s 2.08%, while core CPI growth moderated to 1.65% from 1.73%. The producer price index (PPI) increased to 2.92% from 1.07% in November. For 2024, annual CPI growth averaged 2.18%, exceeding 2% for the third consecutive year, while PPI growth averaged 1.35%.
In the labor market, the unemployment rate declined to 3.32% in December, down 0.04 percentage points from the previous month. For 2024, the average unemployment rate was 3.38%, a 0.10 percentage point decrease from 2023. Real wages grew modestly, with January-November real regular wages up 0.69% year-on-year and total real wages up 2.35%.
In the financial market, liquidity conditions remained stable. In December 2024, the overnight interbank lending rate ranged from 0.813% to 0.828%, with a weighted average of 0.820%, up 0.134 percentage points year-on-year. Regarding the stock market, the Federal Reserve's dot plot suggested a slower-than-expected pace of rate cuts in 2025, pressuring U.S. equities in the short term. Nonetheless, Taiwan's stock market fundamentals stayed strong, with the TAIEX closing at 23,035.10 points, up 3.47%, and an average daily trading volume of TWD 361.01 billion. As for exchange rates, the strengthening U.S. dollar weighed on the New Taiwan dollar and other Asian currencies. Increased foreign net selling of Taiwanese equities in late December triggered significant capital outflows. The NTD depreciated, ending December at 32.781 per U.S. dollar, down 0.99%.
Business Survey Outcomes
The proportion of manufacturing firms that perceived their business as better than expected in December was 19.3%, a decrease of 6.5 percentage points compared to 25.8% in the previous month. On the other hand, the proportion of those who perceived their business as worsening in the target month was 25.7%, an increase of 6.2 percentage points compared to the 19.5% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant in the target month was 55.0%, a slight increase of 0.3 percentage points compared to the 54.7% 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 25.1%, representing an increase of 2.5 percentage points compared to the 22.6% recorded in November. Conversely, the proportion of firms foreseeing a deteriorating economic outlook was 18.5%, marking a decline of 4.4 percentage points from the 22.9% reported one month earlier. Meanwhile, 56.4% of manufacturing firms perceived their business outlook as remaining constant over the next six months, an increase from 54.5% in the previous month.
Overall, manufacturers remain cautiously optimistic regarding their outlook for the future.
The TIER Manufacturing Composite Indicator for December 2024, adjusted for seasonal factors, experienced a corrective rise. The index reached 96.96 points in December 2024, up 1.43 points from a revised 95.53 points in the previous month, showing an upward trend for two consecutive months.
In addition, the TIER Service Sector Composite Indicator for December 2024 exhibited an upward trajectory, rising from a revised value of 93.82 points in the previous month to 96.94 points in the target month, an increase of 3.12 points, marking three consecutive months of growth.
Lastly, the TIER Construction Sector Composite Indicator for December 2024, also adjusted for seasonal factors, stood at 108.52 points, up 3.76 points from 104.76 in the previous month, maintaining an upward trend for the third consecutive month.
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 December survey and are expected to deteriorate over the next six months include:
Plastics and Rubber Raw Materials, Cutlery and Tools Manufacturing.
Manufacturers’ sentiments that have been in decline in the December survey, but are expected to improve over the next six months include:
None.
Manufacturers’ sentiments that have been in decline in the December survey and are expected to remain sluggish over the next six months include:
Soft Drink Manufacturing, Chemical Products Manufacturing.
Manufacturers surveyed who felt the December 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, Transport Equipment Manufacturing and Repairing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing.
Manufacturers surveyed who felt the December outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Food, Slaughtering, Frozen Food Manufacturing, Prepared Animal Feeds Manufacturing, Printing, Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Electronic Machinery, Telecommunication Services.
Manufacturers surveyed who felt the December outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Leather, Fur and Allied Product Manufacturing, Petroleum and Coal Products Manufacturing, Rubber Products Manufacturing, Plastic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Machinery and Equipment Manufacturing and Repairing, Industrial Machinery, Electric Wires and Cables Manufacturing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Bicycles Manufacturing, Precision Instruments Manufacturing, Wholesale.
Manufacturers’ sentiments that have improved in the December survey and is expected to deteriorate over the next six months include:
Yarn Spinning Mills, Man-made Fibers Manufacturing, Retail Sales.
Manufacturers’ sentiments that have improved in the December survey and is expected to remain upbeat over the next six months include:
Edible Oil Manufacturing, Flour Milling and Grain Husking, Wood and Bamboo Products Manufacturing, Paper Manufacturing, Metal Structure and Architectural Components Manufacturing, Education and Entertainment Articles Manufacturing, Basic Civil Structure Construction, Restaurants and Hotels, Banks, Insurance.
Manufacturers’ sentiments that have improved in the December survey and the trend is expected to continue for the next six months include:
Textiles Mills, Fabric Mills, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Porcelain and Ceramic Products Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electrical Appliances and Housewares Manufacturing, Communications Equipment and Apparatus Manufacturing, Motor Vehicles Manufacturing, Motor Parts Manufacturing, Bicycles Parts Manufacturing, Construction, Real Estate Investment, Securities, Transportation and Storage.

Taiwan- Data and Forecast (24th January 2025.)
(NT$100 million, 2016=100), %

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