Economic studies


Population 23.6 million
GDP per capita 24,292 US$
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  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 1.4 2.8 2.7 2.0
Inflation (yearly average, %) 1.0 1.1 1.5 1.3
Budget balance (% GDP) 2.0 -0.1 -0.8 -0.9
Current account balance (% GDP) 13.7 14.5 13.8 13.5
Public debt (% GDP) 36.2 35.7 34.4 33.1

(e): Estimate. (f): Forecast.


  • Robust external financial position
  • Support for R&D through public expenditure
  • Consensus on democratic achievements
  • 4th largest electronics producer in the world


  • Foreign trade vulnerable to economic conditions in mainland China and the United States
  • Massive relocations weakening industrial employment
  • Lack of competitiveness of the service sector
  • Infrastructure gap compared to other advanced Asian economies
  • Growing isolation on the international diplomatic scene


Growth continues to slow down

In 2019, growth is expected to moderate due to lower external demand from the main trading partners, such as China and Hong Kong. Trade tensions between the United States and China could hinder Taiwan's economic activity, as the island is integrated into the Chinese value chain. Its exports are mainly composed of intermediate products, and a share of these is first exported to China, before being re-exported to the United States. Taiwanese exports could therefore indirectly suffer from the US-China trade war. However, these are concentrated around dynamic sectors such as electronics (40% of exports), machinery (mechanical tools for the metal sector and turbojets in particular) and the chemical industry. While these sectors are facing pressures, they are nevertheless likely to remain competitive. Moreover, despite restrictions for travellers from mainland China to Taiwan, tourism should once again develop favourably. While private sector confidence could be affected by this unfavourable business environment, growth will still be driven by infrastructure spending, both in the healthcare and energy sectors, as part of the national infrastructure development programme.

Inflation will remain moderate in 2019 due to the modest growth of private consumption (53% of GDP in 2017), which will nevertheless be stimulated by the 5% increase in the minimum wage, implemented at the beginning of 2018. The construction of housing (particularly social housing), at the government's initiative, should help reduce rental prices.


Strength of internal and external accounts

The implementation of the Infrastructure Development Plan, which started in 2017, will slightly increase public spending. This programme, which focuses on the modernisation of the rail network and water distribution, as well as the development of renewable energies, urban areas and innovation, should be completed by 2025. In addition, defence spending is expected to increase. Budgetary revenues are also expected to increase, thanks to increased tax revenues from taxes on income and financial transactions, allowing the government to stabilise the low government deficit. Public debt, almost entirely denominated in New Taiwanese dollars and held by domestic investors, will remain at a moderate level.

On the external accounts side, the current account might deteriorate slightly but will remain in surplus due to a large trade surplus (14% of GDP in 2017). Despite a slowdown in Chinese growth and trade war, exports are expected to remain dynamic, as global demand for electronics should continue to support exports. In addition, this environment could strengthen the government's “New Policy for the South”, which aims to extend Taiwan's economic integration with South and Southeast Asian countries in order to limit its dependence on China. At the same time, imports, which are largely driven by oil prices, are expected to increase in the same proportion as exports. The level of external debt (about 30% of GDP) does not compromise the stability of the island's external position, as with a net external position of 200% of GDP in 2017, it is one of the world's largest creditors.


Tense relations with mainland China, at the heart of political life

In 2016, the presidential and legislative elections brought the Democratic Progressive Democratic Party (DPP) and President Tsai Ing-wen to power, marking a turning point in the policy towards mainland China. While Kuomintang, the now main opposition party, and the previous President were in favour of a policy of rapprochement, the DPP has a tougher position and refuses to join the 1992 consensus that governs relations between the two sides of the Formosa Strait and recognizes the principle of “one China”. This policy should not change in view of the diplomatic pressure exerted by Beijing to isolate the island.

In 2018, El Salvador, the Dominican Republic and Burkina Faso ceased to recognize Taiwan as a sovereign country in favour of mainland China. In addition, this diplomatic position is echoed by part of the island's population, which is calling for a referendum on an official declaration of independence. However, the President is unlikely to favour this initiative, preferring the status quo. This issue will be central to the election campaign in view of the 2020 presidential and legislative elections. Although the DPP appears to be in a good position, the President is facing growing public dissatisfaction with her government, due to disappointing economic performance.


Last update: February 2019