The Taiwanese Economy in January 2026

Examining recent international economic conditions, manufacturing activity has shown signs of recovery in the United States and Japan, with confidence indicators in the euro area also improving in tandem. However, China's manufacturing activity slipped back into contraction territory, suggesting that while global manufacturing momentum has partially recovered, a broad-based revival has yet to materialize.
On the domestic manufacturing front, sustained growth in demand for AI and high-performance computing continued to drive overall manufacturing expansion, with the chemical and steel industries also seeing improved confidence on the back of stronger exports. That said, softer end-market demand in computers and audiovisual electronics tempered semiconductor-sector growth, causing the share of electronic and machinery firms holding an optimistic view of current business conditions to edge down from the previous month. The services sector benefited from a strong equity market performance in January, boosting sentiment among finance-related firms, while stable freight rates and recovering demand in container and bulk shipping further underpinned confidence in the transportation and warehousing sector.
In the construction sector, January activity was broadly flat as new earthwork material regulations took effect and certain projects were deferred. However, as government mitigation measures are progressively released, major public infrastructure projects advance, and AI-driven demand for technology facility construction continues, the sector's outlook for the next six months is expected to turn toward growth. By contrast, the real estate market remains subdued, with transaction volumes still weak amid ongoing credit controls, mortgage rates above 2%, and a persistent price expectation gap between buyers and sellers. Such conditions are likely to persist in the near term.
According to survey results and model calculations, the Manufacturing Composite Indicator for January 2026 extended its upward trend for a seventh consecutive month, while the Services Composite Indicator rose for a fourth consecutive month. The Construction Composite Indicator, however, turned downward again.
On the external trade front, buoyed by robust demand for AI, high-performance computing, and cloud services, and further aided by a low base effect from fewer working days during last year's Lunar New Year period, Taiwan's export growth rate expanded sharply from 43.4% year-on-year in December 2025 to 69.9% in January 2026. Import growth likewise surged from 14.9% to 63.6% year-on-year. The monthly trade surplus reached USD 18.893 billion, up 87.7% year-on-year, signaling a marked acceleration in external demand. Among export categories, information, communications, and audiovisual products as well as electronic components both hit all-time monthly highs driven by emerging technology applications, with the two categories combined growing 92.8%; non-electronic and non-ICT products also averaged growth of 20.2%. On the import side, monthly imports reached USD 46.87 billion, the second-highest monthly figure on record, rising 63.6% year-on-year under the low base effect, reflecting deepening international division of labor in the AI supply chain, growing export-derived demand, and active capital equipment expansion by businesses.
Turning to prices, the timing difference in the Lunar New Year holiday created base effects that caused the year-on-year growth rate for the education and entertainment category to turn negative in January 2026, as hotel accommodation, outbound tour packages, and gift-giving expenditures had recorded elevated figures in January of the prior year; the miscellaneous category also saw a notable decline for the same reason. The transportation and communications category recorded a wider year-on-year decline, driven by falling international oil prices, continued drops in fuel costs, and smaller price increases for transport services and maintenance parts. With multiple factors weighing on prices simultaneously, overall price pressures moderated: the headline CPI growth rate fell from 1.30% in December 2025 to 0.69% in January 2026, while core CPI eased from 1.83% to 1.24%.
In terms of negotiated working-hour reductions, the number of workers on reduced-hours arrangements stood at 5,675 as of end-January 2026, with the metal and electromechanical industries most notably affected. This figure represents a decrease of 1,696 workers compared to end-December 2025, indicating continued improvement. On the wage front, average regular earnings in December stood at NT$51,263, up 3.11% year-on-year; after adjusting for inflation, real total annual earnings per worker grew 2.19% year-on-year.
As for financial markets, sustained optimism over AI technology applications, bolstered by TSMC's better-than-expected Q4 earnings release and continued upbeat guidance alongside progress in tariff negotiations, drove AI-weighted stocks higher and pushed the Taiwan Weighted Index to close at 32,063.75 points at end-January, a gain of 10.70% from end-December 2025, with average daily turnover reaching NT$792.162 billion. On the exchange rate front, the New Taiwan Dollar weakened in the first half of the month as foreign investors were net sellers of Taiwan equities, capital flows tilted toward outflows, and new insurance industry foreign exchange accounting rules boosted demand for US dollars. In the second half, sustained net foreign buying of Taiwan equities and rising pre-Lunar New Year currency conversion demand from exporters helped the NTD recover. Overall, the NTD closed at 31.468 per US dollar at end-January, representing a marginal depreciation of just 0.10% from end-December 2025, tracing a pattern of initial weakness followed by stabilization.

Business Survey Outcomes

The proportion of manufacturing firms that perceived their business as better than expected in January was 23.8%, a drop of 10.3 percentage points compared to 34.1% in the previous month. Conversely, the proportion of those who perceived their business as worsening was 24.4%, representing an increase of 2.4 percentage points compared to the 22.0% reported in the previous month. Additionally, the proportion of manufacturing firms that perceived their business as remaining constant was 51.8%, an increase of 7.9 percentage points compared to the 43.9% recorded in the previous month.
Looking ahead, the share of manufacturers anticipating an improvement in business over the next six months stood at 26.1%, a decrease of 7.7 percentage points from the 33.8% recorded in December. Similarly, the proportion of firms foreseeing a deteriorating outlook was 16.3%, down 2.6 percentage points from the 18.9% reported one month earlier. Meanwhile, the share of manufacturing firms perceiving their business outlook as remaining constant over the next six months rose 10.3 percentage points to 57.6%, up from 47.3% in the previous month.
The Manufacturing Composite Indicator for January 2026 stood at 98.44, up 1.27 points from the revised December 2025 reading of 97.17, extending its upward trend for a seventh consecutive month. The Services Composite Indicator climbed to 95.47, up 2.63 points from 92.84 in December 2025, marking a fourth consecutive month of increase. The Construction Composite Indicator, however, declined to 99.92 in January 2026, down 2.54 points from 102.46 in December 2025, turning downward once 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 January survey and are expected to deteriorate over the next six months include:
Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing.
　
Manufacturers’ sentiments that have been in decline in the January survey, but are expected to improve over the next six months include:
Education and Entertainment Articles Manufacturing.
　
Manufacturers’ sentiments that have been in decline in the January survey and are expected to remain sluggish over the next six months include:
Printing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Bicycles Manufacturing, Construction, Real Estate Investment.
　
Manufacturers surveyed who felt the January outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Motor Vehicles Manufacturing.
　
Manufacturers surveyed who felt the January outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Paper Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Bicycles Parts Manufacturing, Precision Instruments Manufacturing, Wholesale, Restaurants and Hotels.
　
Manufacturers surveyed who felt the January outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Slaughtering, Prepared Animal Feeds Manufacturing, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Wood and Bamboo Products Manufacturing, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Petroleum and Coal Products Manufacturing, Glass and Glass Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Electric Wires and Cables Manufacturing, Electrical Appliances and Housewares Manufacturing, Communications Equipment and Apparatus Manufacturing, Transport Equipment Manufacturing and Repairing, Basic Civil Structure Construction, Retail Sales, Telecommunication Services.
　
Manufacturers’ sentiments that have improved in the January survey and is expected to deteriorate over the next six months include:
Plastic Products Manufacturing.
　
Manufacturers’ sentiments that have improved in the January survey and is expected to remain upbeat over the next six months include:
Food, Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking, Soft Drink Manufacturing, Yarn Spinning Mills, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Electronic Machinery, Electronic Parts and Components Manufacturing, Banks.
　
Manufacturers’ sentiments that have improved in the January survey and the trend is expected to continue for the next six months include:
Textiles Mills, Fabric Mills, Man-made Fibers Manufacturing, Chemical Products Manufacturing, Rubber Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Securities, Insurance, Transportation and Storage.