Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Taiwan was facing a relatively low economic growth at 3% back in 2019 due to lower demand from trade partners and  trade tensions between China and the United States. In the context of the COVID-19 pandemic, the country registered a 3.1% GDP growth in 2020, one of the best results in the world, and 6.6% in 2021 (IMF, October 2022). Taiwan enjoys a good financial position, is the 4th electronic producer in the world and support R&D. It reached a growth of 3.3% in 2022. According to the latest IMF forecasts, growth is expected to slow down to 2.8% in 2023 and 2.1% in 2024, subject to the post-pandemic global economy recovery.

According to the latest IMF estimates, public debt closed at 28.4% of GDP in 2021 and 24.1% in 2022. It is expected to decrease in 2023 and 2024 to 22.1% and 20.2% respectively. The budget was in deficit at -1.9% of GDP in 2019 and increased due to the COVID-19 pandemic to -2.7% in 2020 before coming back to +0.7% in 2021 and +0,5% in 2022. It is expected to remain stable in the following years at +0,5% in 2023 and 2024. Inflation remained low at 2% in 2021 and 3,1% in 2022. It is forecasted to reach 2.2% in 2023 and 1.4% in 2024 (IMF, October 2022). Taiwan industries are affected by the international trade tensions, which include electronics (40% of Taiwan's exports), machinery, and chemicals. Chinese restrictions on travel from mainland China to Taiwan have also affected this sector. Other economic challenges include massive relocations that weaken industrial employment, uncompetitive service sector, insufficient infrastructure, and diplomatic isolation. Nevertheless, growth will be aided by infrastructure spending in healthcare and energy. The Infrastructure Development Plan will also modernise the rail network and water distribution. While budget deficits are expected, taxes were increase on income and financial transactions. Most public debt is domestic and owed in New Taiwanese dollars.

The government’s approach to the COVID-19 pandemic was among the world’s most successful. Avoiding any abusive restrictions, officials focused on contact tracing and quarantines for overseas travelers, and provided accurate and timely information to the public. In 2021 and 2022 growth was resilient, mainly thanks to its export-oriented manufacturing sector, as global demand, especially for electronics, was accelerating. The unemployment rate remained steady at 4% in 2021, virtually unchanged compared to 2020 and 2019 (3.9% and 3.7% respectively) and decreased to 3.6% in 2022. It is expected to remain at this level in 2023 and 2024 (IMF, October 2022). Social challenges include an ageing population, low birth rates, and a tense political agenda focusing on reunification with mainland China.

Amid the global economic slowdown, the country's semiconductor sector is particularly exposed to the economic downturn, but slowing global demand could hit non-tech sectors even harder, particularly those related to commodity and consumer products (Taiwan ratings, 2023).
In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.

Any Comment About This Content? Report It to Us.