Economic Trends

Economic Growth

Taiwan’s GDP growth rate was 2.2% in 2013 and 3.92% in 2014. In 2015 economic growth stagnated and fell by 0.65%. In 2016 the growth rate picked up again, -0.29% in Q1 and 0.7% in Q2. Currently the GDP growth rate is 1.22%. The Business Environment Risk Intelligence S.A. (BERI) ranked Taiwan third in terms on overall investment environment. However, challenges arise from Taiwan’s dependency on energy imports and the rapidly aging society.

ECFA

The Economic Cooperation Framework Agreement (ECFA) is a preferential trade agreement between the governments of the People's Republic of China and the Republic of China, with the aim to reduce cross-strait tariffs and investment barriers for a large number of sectors in trade in goods and services. Additionally to the relaxations of trade barriers, ECFA aims to promote two-way investment as well as trade and investment facilitation and industry exchanges and cooperation. ECFA was signed in Chongqing on June 29, 2010 and came into effect on September 12, 2010. The tariff reduction arrangement within the framework of ECFA is called Early Harvest List. Since January 1, 2011 custom duties on 539 Taiwanese and 267 Chinese products on this list have started to be reduced step-by-step and are effectively down to zero since January 1, 2013. China and Taiwan have adopted different tariff escalations. For Taiwan, the deal covers 15% of the country’s exports to the mainland, including a number of the top export categories (petrochemicals and plastics, cars and parts, textiles, machine tools and medical equipment) and opened up the market on the mainland in service sectors such as banking, insurance and accounting. For further information please download the Early Harvest List (Chinese, English and German) in our Trade Info section.

On the 21st of June in 2013, Taiwan and China signed another Cross-Strait Service Trade Agreement, which is currently examined by the Legislative Yuan and has not yet entered into force. According to Cross-Strait Service Trade Agreement, China will open 80 items (65 non-financial and 15 financial) to Taiwanese business and Taiwan will open 64 items (55 non-financial and 9 financial) to Chinese business.  The new government is expected to seek ratification of the agreement.

Labor Market

The unemployment rate decreased continuously in the past years from 4.39% in 2011 down to 4.24% and 4.18% in 2012 and 2013 respectively. In 2015 the unemployment rate was 3.78, but in the first half of 2016 it rose to 4.08%. The unemployment rate is expected to continue to fall over the coming years, settling at around 3.4% from 2017 onwards. Taiwan´s monthly average wage increased from USD 1124,6 (TWD 37.612) in May 2013 to USD 1270 (TWD 37.973) the same month of 2014. Since July 2014, the minimum wage is USD 641 (TWD 19.273). Starting January 2017 the minimum wage will increase again by 5%: NTD 21,009 monthly and NTD 126 hourly wage.

External Trade

In 2015, total exports amounted to USD 285.34 billion, a decrease by 10.9% compared to the year before. In the first half of 2016, Taiwanese exports totaled 180.1 billion, a decrease of 6.6% compared to the first half of 2015. Since 2002 Taiwan – under the name of “Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu (Chinese Taipei)" – is a member of the WTO and became member of the WTO’s “Government Procurement Agreement (GPA)” in 2009. Since Taiwan’s economy is extremely export oriented, it is generally regarded as an open economy with few heavy trade barriers.

Moreover, since Taiwan is one of the global leaders in the information and communication technology industry (ICT) its main export products are electronics, followed by mineral products, optoelectronics, plastics, chemicals and machinery. The ICT sector is expected to continue its growth, mainly because of Taiwan`s strong engagement in semiconductors and the LED-industry. Taiwan is also increasing its activities in the biotechnology and medical sector and has established a reputation in machinery construction, especially machinery tools. Taiwan’s most important trading partner by trade volume remains the PR China with trade ties expected to be further deepened; among others due to further custom duties reductions (ECFA) and the cross strait currency clearing agreement.

Aggregate Economic Data

Indicator

2014

2015

2016

GDP (in bn. USD)

530.0

523.6

527.4*

Economic growth rate (yoy in %)

3.92

-0.65

1.22*

Private consumption
(real; yoy in %)

3.33

2.3

1.59*

Import (cif; nominal; yoy in %)

1.4

-25.8

-8.1*

Export (cif; nominal; yoy in %)

2.8

-10.9

-7.3*

CPI (yoy in %)

1.2

0.31

0.57*

Unemployment rate (in %)

3.96

3.78

4.08*

* September 2016

Source: DGBAS, 2016
MOEA, 2016

Last update: September 2016