Taiwan, China: Economic and Political Overview
In 2020-2021, Taiwan bucked global trends by maintaining stable macroeconomic performance amid the Covid-19 pandemic: economic growth surged from an average of 2.8% yearly in 2016-2018 to 4.5% in 2019-2021, propelled by increased manufacturing production and exports, along with supportive monetary and fiscal policies, alongside rising investment rates. After growing an estimated 1.3% in 2023, economic activity accelerated to 4.3% in 2024, the highest rate in three years, driven by stronger-than-expected private investment and a surge in high-tech exports (official governmental figures). According to the IMF, growth is anticipated to moderate to 2.7% this year and 2.6% in 2026, as robust exports of AI-related products and investment activities are expected to sustain growth, balancing weak demand in traditional manufacturing industries.
Taiwan maintains a solid external financial position, characterized by significant current account surpluses averaging between 10% and 15% of GDP over the past decade. After recording a budget deficit of 0.8% of GDP in 2024, the 2025 Budget is notably ambitious, with a nearly 20% increase from the preceding year. Social welfare will be the largest expenditure, followed by education, science, and culture. Funding for five priority industries—semiconductors, AI, military, security, and next-gen communications—will rise by 40%. The budget is expected to be nearly balanced in 2025. However, geopolitical tensions could strain finances in the second half, with slower export growth and new fiscal measures to support the economy. Military spending, currently at 2.5% of GDP, should remain high. Public debt – at 26.4% in 2024, from 29.1% one year earlier - is set to decline further (to 22.2% by 2026), remaining low by global standards (IMF). Inflation decelerated from 2.5% in 2023 to 2.1% last year. By 2025, inflation is expected to fall below the Central Bank of the Republic of China's (CBC) 2% target.
Official governmental figures show that Taiwan's unemployment rate fell to 3.38% in 2024, the lowest since 2000, down 0.1 percentage points from 2023. By education level, the jobless rate was highest among university graduates at 4.52%, followed by high/junior high school graduates at 3.21% and vocational college graduates at 2.68%. By age, unemployment was highest among those aged 20-24 at 11.62%, driven by first-time jobseekers, followed by 15-19-year-olds at 8.58%, 25-29-year-olds at 5.87%, and 30-34-year-olds at 3.36%. Overall, the number of individuals in employment hit about 11.60 million in 2024. Taiwan’s GDP per capita (PPP) was estimated at USD 82,615 in 2024 by the IMF, one of the highest ratios globally.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 755.67 | 775.02 | 814.44 | 859.63 | 902.08 |
| GDP (Constant Prices, Annual % Change) | 1.3 | 3.7 | 2.7 | 2.6 | 2.5 |
| GDP per Capita (USD) | 32,404 | 33,234 | 34,924 | 36,862 | 38,682 |
| General Government Balance (in % of GDP) | -2.3 | -0.8 | -0.8 | -0.9 | -1.0 |
| General Government Gross Debt (in % of GDP) | 29.1 | 26.4 | 24.2 | 22.2 | 20.5 |
| Inflation Rate (%) | 2.5 | 2.1 | 1.7 | 1.6 | 1.6 |
| Unemployment Rate (% of the Labour Force) | 3.7 | 3.7 | 3.7 | 3.7 | 3.7 |
| Current Account (billions USD) | 104.09 | 114.46 | 118.74 | 134.46 | 140.81 |
| Current Account (in % of GDP) | 13.8 | 14.8 | 14.6 | 15.6 | 15.6 |
Source: IMF – World Economic Outlook Database, October 2021
The agriculture sector contributes only very modestly to the GDP (around 2% according to figures from the official statistical agency) and employs about 5% of the labour force in Taiwan. Taiwan's natural resources are limited, the main crops being rice (with an average production of 1.14 million tons in 2019-23), sugar cane, fruits and vegetables. Rice cultivation remains a fundamental component of Taiwan's agricultural landscape, alongside the production of fruits like bananas, pineapples, and citrus fruits, as well as vegetables such as leafy greens and root vegetables. Livestock farming, particularly pork and poultry, also contributes significantly to the sector.
The secondary sector accounts for almost 37% of GDP and employs about 35% of the labour force. The Taiwanese industrial sector encompasses a broad array of main sectors, including electronics, machinery, petrochemicals, and textiles. Renowned globally for its electronics industry, Taiwan is a leading producer of semiconductors, flat-panel displays, and consumer electronics. The machinery sector also plays a vital role, with Taiwan producing a diverse range of machinery and equipment for various industries. Petrochemicals form another cornerstone, with Taiwan hosting several petrochemical refineries and producing a wide range of chemical products. Additionally, the textile industry remains significant, with Taiwan known for its high-quality fabrics and garment manufacturing. Emerging sectors in Taiwan's industrial landscape include green energy technologies, biotechnology, and precision machinery, driven by innovation and government initiatives to foster advanced manufacturing capabilities. According to data from the Ministry of Economic Affairs (MOEA), in 2024, Taiwan saw its first growth in industrial production after two years of decline, driven by strong demand for artificial intelligence applications and high-performance computing devices. The industrial production index for the full year increased by 11.4% compared to the previous year.
Services account for over 62% of GDP and employ nearly 70% of the labour force. The Taiwanese services sector encompasses a diverse range of main sectors, including finance, tourism, healthcare, and information technology (IT). Taiwan's financial sector is robust, with a well-developed banking system and a growing emphasis on fintech innovation. Tourism is also a significant contributor to the economy. The healthcare sector is also notable, with Taiwan known for its high-quality medical services and growing medical tourism industry. Information technology services, including software development, digital content creation, and e-commerce, are rapidly expanding, driven by Taiwan's expertise in technology and innovation.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Latest Update: March 2025
