The Taiwanese Economy in July 2026

Global manufacturing momentum remains uneven: U.S. manufacturing continues to expand, eurozone economic confidence keeps improving, and Japan's manufacturing sector sustains growth on AI-related and semiconductor demand. In contrast, China's manufacturing activity has slipped into contraction amid weak demand. Meanwhile, escalating U.S.–Iran tensions have pushed up energy prices and inflation expectations, while fiscal and political uncertainty in major economies has driven long-term bond yields higher in the U.S., Japan, and the U.K., raising financing and credit costs and intensifying global financial market volatility.
On the domestic front, robust demand for AI, high-performance computing, and smartphone stocking continues to support Taiwan's semiconductor supply chain. The chemical industry saw notable improvement in July, benefiting from rebounding oil prices, downstream restocking, and gradual capacity recovery. In services, retail sales grew on summer travel, heat-driven consumption, and typhoon-preparation demand; the securities sector weakened amid a soft stock market and shrinking trading volume, while banking remained stable, supported by lending, wealth management, and credit card business.
Turning to construction, the sector still faces rising earthwork and building-material costs, but benefited from strong AI/ICT-related plant construction demand and the progressive commencement of public infrastructure projects, keeping the July outlook steady with growth expected to continue over the next six months. In real estate, the number of building transfer transactions across Taiwan's six special municipalities rose 12.0% month-on-month in July, driven mainly by owner-occupier demand and new-home handovers in certain metropolitan areas, though overall transaction volume remains low. With credit controls still in place, the housing market is expected to remain case-by-case, with a pattern of contracting volume and consolidating prices.
According to the Taiwan Institute of Economic Research (TIER), the July composite indicator for both the manufacturing and construction sectors rose month-on-month, with construction posting its fourth consecutive monthly increase. The services sector, however, saw its composite indicator decline after four consecutive months of improvement.
With respect to trade, driven by expanding opportunities in AI, high-performance computing, and cloud services, along with rising export prices, Taiwan's exports posted their 33rd consecutive month of year-on-year growth in July, with both exports and imports maintaining double-digit growth. However, as the year-earlier base rose, export growth decelerated from 40.3% in June to 32.9% in July, while import growth slowed from 51.8% to 37.4%. Among major export categories, AI-related demand remained strong and traditional goods improved from the prior month, with only textiles (-9.1%) and transport equipment (-0.7%) posting declines. On the import side, capital equipment imports rose 64.6% year-on-year, driven by AI supply-chain specialization, export-derived demand, and continued capital investment; semiconductor equipment imports alone rose 39.0%. For January–July 2026 cumulatively, exports grew 44.7% and imports grew 39.8% year-on-year, with a trade surplus of US$114.61 billion, up 63.5% from the same period last year.
As for prices, food price inflation rose from 1.78% in June to 2.49% in July, lifting its contribution to headline CPI from 0.47 to 0.65 percentage points, mainly due to continued increases in dining-out costs and reduced vegetable supply (vegetable prices up 3.78% y/y) following heavy rain and typhoons in June and July. This was partially offset by falling international oil prices, which eased fuel cost increases, along with slower price growth in recreation/education and some services, resulting in a slight moderation of headline CPI. July CPI growth eased to 2.54% y/y from a revised 2.59% in June, while core CPI slowed from 2.44% to 2.38%. For January–July 2026 cumulatively, CPI rose 1.81% y/y and PPI rose 7.93% y/y.
Regarding the labor market, the average unemployment rate for January–July was 3.32%, down 0.02 percentage points from the same period last year. In real terms (adjusted for inflation), average cumulative regular earnings per worker rose 1.42% y/y for January–June, while average cumulative total earnings rose 1.74% y/y.
In domestic financial markets, the weighted average interest rate on new loans extended by Taiwan's five major banks rose to 2.167% in July, up 0.012 percentage points from June's 2.155%. Equity markets saw heightened volatility in July amid U.S. stock market weakness, heavier selling in chip stocks, growing concerns over returns on massive AI capital expenditure, and renewed U.S.–Iran conflict driving oil prices higher. These factors dampened risk appetite and increased deleveraging pressure. Technology and AI-related stocks, which had posted the largest gains over the past year, faced particularly sharp corrections amid elevated valuations and profit-taking. The Taiwan Weighted Index closed at 43,119.75 points at end-July, down 6.52% from end-June, with average daily trading value of NT$1,041.93 billion. On the currency front, sustained foreign net selling of Taiwan equities and net capital outflows, combined with a relatively strong U.S. dollar, kept the New Taiwan Dollar under pressure; it closed at NT$32.292 per U.S. dollar at end-July, a depreciation of 1.41% from end-June.

Business Survey Outcomes

The proportion of manufacturing firms that reported improved business conditions in the current survey period was 31.3%, an increase of 11.1 percentage points from 20.2% in the prior month. Conversely, the proportion of those reporting a deterioration was 14.6%, a drop of 10.2 percentage points from 24.8% in the prior month. The remaining 54.0% assessed business conditions as unchanged, slightly down of 1.0 percentage points from 55.0% in the prior month.
Looking ahead, the share of manufacturers anticipating an improvement in business conditions over the next six months remained flat at 29.7% from the prior month. Similarly, the proportion of firms foreseeing a deterioration in business conditions was 15.4%, an increase of 1.7 percentage points from 13.7% in the prior month. Meanwhile, the share of manufacturing firms expecting business conditions to remain unchanged decreased 1.7 percentage points to 54.9% from 56.6% in the prior month.
The Manufacturing Composite Indicator increased 2.48 points to 101.09 in July 2026 from the revised June reading of 98.61. The Services Composite Indicator dipped 1.29 points to 98.20 in July 2026 from the revised June reading of 99.49, ending its prior four consecutive months of increase and turning downward. The Construction Composite Indicator rose 2.96 points to 110.55 in July 2026 from 107.59 in June, marking the fourth consecutive month of increase.

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:
Motor Vehicles Manufacturing, Motorcycles Parts Manufacturing.

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:
Electrical Appliances and Housewares Manufacturing, Transport Equipment Manufacturing and Repairing, Securities.

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:
Textiles Mills, Yarn Spinning Mills, Rubber Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing.

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:
Edible Oil Manufacturing, Flour Milling and Grain Husking, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electric Wires and Cables Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Motor Parts Manufacturing, Construction, Basic Civil Structure Construction, 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:
Leather, Fur and Allied Product Manufacturing, Paper Manufacturing, Printing, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Motorcycles Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Precision Instruments Manufacturing, Education and Entertainment Articles Manufacturing, Real Estate Investment, Insurance, 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:
Fabric Mills, Industrial Chemicals, Petrochemicals Manufacturing, Man-made Fibers Manufacturing.

Manufacturers' sentiments that have improved in the July survey and is expected to remain upbeat over the next six months include:
Food, Slaughtering, Frozen Food Manufacturing, Soft Drink Manufacturing, Prepared Animal Feeds Manufacturing, 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, Audio and Video Electronic Products Manufacturing, Electronic Parts and Components Manufacturing, Retail Sales, Wholesale.

Manufacturers' sentiments that have improved in the July survey and the trend is expected to continue for the next six months include:
Manufacturing, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Plastics and Rubber Raw Materials, Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing, Communications Equipment and Apparatus Manufacturing, Banks.

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