The Taiwanese Economy in September 2025

Recently, U.S.-China trade tensions have escalated once again. China announced expanded export controls on rare earth elements and advanced technologies, launched investigations into U.S. corporate mergers and acquisitions, and imposed additional port fees on American vessels. In response, the United States implemented 100% tariffs on Chinese goods beginning in November and introduced export restrictions on critical software, signaling further intensification of bilateral economic confrontation. Absent opportunities for de-escalation, global economic tensions are likely to continue deteriorating.
Driven by robust demand for new consumer electronics and sustained AI-related opportunities, exports of electronic and information technology products remained strong in September, leading manufacturers to express reduced pessimism regarding current and near-term business conditions compared to the previous month's survey. However, the oscillating nature of U.S.-China relations—alternating between periods of rapprochement and tension—combined with stalled progress in Taiwan-U.S. tariff negotiations, has kept manufacturing sector sentiment predominantly cautious. In the services sector, while financial industries benefited from strong equity market performance in September, the traditional Ghost Month dampened demand for durable goods including automobiles, home furnishings, and appliances. Additionally, as the summer travel season concluded and tourism activity moderated, retail and food service operators reported weaker monthly performance.
The construction sector benefited from recent project deliveries previously delayed by material cost inflation and labor shortages, driving improvements in construction progress and sales. Strong execution of public infrastructure projects, with budget utilization reaching multi-year highs, contributed to a notable sector recovery. Looking ahead, public infrastructure appropriations for 2026 represent a significant increase over 2025 levels, and ongoing capital expenditures by domestic and international technology manufacturers are expected to provide continued momentum, supporting a positive construction sector outlook. In real estate, September witnessed a 3.5% month-over-month decline in building ownership transfers across the six major municipalities, reflecting moderating new home deliveries. While recent policy adjustments provided near-term support, central bank credit controls and tightened mortgage lending standards have maintained market conditions characterized by reduced transaction volumes and price stabilization.
According to the Taiwan Institute of Economic Research (TIER), composite indicators for manufacturing and construction continued their upward trajectory in September, while the services sector composite indicator reversed course and declined.
In foreign trade, driven by surging demand for new consumer electronics and sustained AI-related opportunities that offset weakness in traditional industrial exports, September import and export performance remained at elevated levels. Export growth held steady at 33.80% year-over-year, while import growth moderated from 29.48% to 25.12%. Among major export categories, information and communication products and electronic components maintained robust growth rates, supported by continued strong demand for AI applications and seasonal inventory building for consumer electronics. Traditional industrial exports, while returning to positive year-over-year growth, remained at relatively subdued levels, underscoring the persistent divergence between high-tech and traditional manufacturing performance.
Regarding prices, as disruptions from typhoons and heavy rainfall subsided and vegetable supply normalized, food price inflation decelerated from 3.18% in August to 2.64% in September, contributing 0.71 percentage points to the headline index, down 0.14 percentage points month-over-month. Additionally, enhanced vehicle purchase tax incentives effective September, combined with manufacturer promotional activities, drove larger year-over-year declines in transportation and communication prices. Headline CPI inflation decelerated from 1.60% in August to 1.25% in September, while core CPI inflation eased from 1.75% to 1.46%. The PPI index improved from -4.83% to -3.73% year-over-year, reflecting moderating price declines in chemical materials, basic metals, and electronic components. For January-September 2025, cumulative CPI inflation registered 1.77%, with PPI at -1.53%.
In the labor market, as of end-September 2025, 8,505 workers were subject to reduced-hour arrangements, predominantly concentrated in manufacturing. The metal and machinery sector accounted for 6,749 workers, representing 79.4% of the total affected workforce. Regarding wages, average total compensation for full-time domestic employees reached NT$65,207 in August, up 4.35% year-over-year, while regular earnings averaged NT$50,885, up 3.07%. Adjusting for inflation, real regular earnings increased 1.29% year-over-year for the January-August 2025 period, with cumulative real total compensation rising 2.02%.
In financial markets, weak U.S. labor market data fueled expectations for Federal Reserve rate cuts, while strong revenue performance by Taiwan's leading semiconductor manufacturer and Oracle's substantial contract with OpenAI—expected to benefit Taiwan's AI server supply chain—attracted sustained capital inflows into AI-weighted equities. The Taiwan Stock Exchange Weighted Index closed September at 25,820.54 points, up 6.55%, with average daily turnover of NT$485.16 billion. Regarding foreign exchange, early September witnessed substantial net foreign equity purchases and capital inflows, appreciating the New Taiwan Dollar and reinforcing expectations for Fed monetary easing. However, foreign investors reversed to net selling in late September, with capital outflows and cautious Fed commentary on the pace of rate cuts moderating the currency's appreciation. The NT Dollar closed September at 30.469 per U.S. dollar, appreciating 0.45% for the month.

Business Survey Outcomes

The proportion of manufacturing firms that perceived their business as better than expected in September was 22.0%, a decrease of 1.9 percentage points compared to 23.9% in the previous month. Conversely, the proportion of those who perceived their business as worsening in the target month was 25.1%, representing an 8.2 percentage point drop compared to the 33.3% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant in the target month was 52.8%, a significant increase of 10.0 percentage points compared to the 42.8% 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 19.3%, representing a marginal increase of 0.7 percentage points compared to the 18.6% recorded in August. Conversely, the proportion of firms foreseeing a deteriorating economic outlook was 29.6%, marking a decrease of 4.0 percentage points from the 33.6% reported one month earlier. Meanwhile, 51.1% of manufacturing firms perceived their business outlook as remaining constant over the next six months, up from 47.7% in the previous month, representing an increase of 3.4 percentage points.
The TIER Manufacturing Composite Indicator for September 2025 reached 91.65 points, an increase of 2.52 points from 89.13 in August, recording three consecutive months of sustained growth. In addition, the TIER Service Sector Composite Indicator for September 2025 reached 85.23 points, down 2.88 points from the revised August figure of 88.11. Lastly, the TIER Construction Sector Composite Indicator for September 2025 stood at 97.35 points, up 0.8 points from 96.55 in the previous 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 September survey and are expected to deteriorate over the next six months include:
Paper Manufacturing, Petroleum and Coal Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Bicycles Manufacturing, Bicycles Parts Manufacturing, Real Estate Investment.

Manufacturers’ sentiments that have been in decline in the September survey, but are expected to improve over the next six months include:
Food, Frozen Food Manufacturing, Retail Sales, Restaurants and Hotels.

Manufacturers’ sentiments that have been in decline in the September survey and are expected to remain sluggish over the next six months include:
Soft Drink Manufacturing, Education and Entertainment Articles Manufacturing, Wholesale, Transportation and Storage.

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:
Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Plastic Products Manufacturing, Screw, Nut Manufacturing, Transport Equipment Manufacturing and Repairing.

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:
Edible Oil Manufacturing, Flour Milling and Grain Husking, Wood and Bamboo Products Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Securities.

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, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Printing, Man-made Fibers Manufacturing, Rubber Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Electrical Machinery, Electric Wires and Cables Manufacturing, Electrical Appliances and Housewares Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Construction.

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

Manufacturers’ sentiments that have improved in the September survey and is expected to remain upbeat over the next six months include:
Slaughtering, Prepared Animal Feeds Manufacturing, Electronic Machinery, Electronic Parts and Components Manufacturing, Precision Instruments Manufacturing, Basic Civil Structure Construction, Banks, Insurance.

Manufacturers’ sentiments that have improved in the September survey and the trend is expected to continue for the next six months include:
Textiles Mills, Yarn Spinning Mills, Fabric Mills, Chemical Products Manufacturing, Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Metal Structure and Architectural Components Manufacturing, Communications Equipment and Apparatus Manufacturing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Motor Vehicles Manufacturing, Telecommunication Services.