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.
|Main Indicators||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||673.18||775.74||761.69||790.73||843.19|
|GDP (Constant Prices, Annual % Change)||3.4||6.5||2.5||2.1||2.6|
|GDP per Capita (USD)||28,571||33,186||32,643||33,908||36,157|
|General Government Balance (in % of GDP)||-2.7||-2.3||-0.5||-0.5||-0.5|
|General Government Gross Debt (in % of GDP)||32.1||30.1||27.5||25.0||22.6|
|Inflation Rate (%)||-0.2||2.0||2.9||1.9||1.7|
|Unemployment Rate (% of the Labour Force)||3.9||4.0||3.7||3.7||3.7|
|Current Account (billions USD)||95.55||114.57||101.73||93.84||95.26|
|Current Account (in % of GDP)||14.2||14.8||13.4||11.9||11.3|
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
The agriculture sector contributes only very modestly to the GDP (around 2% in 2022 according to figures from the official statistical agency) and employs about 5% of the labour force in Taiwan. Taiwan's main crops are rice, sugar cane, fruits and vegetables. Taiwan's natural resources are limited. The Ministry of Labor allows dairy farms to hire migrant workers to compensate for labor shortages since 2019.
The secondary sector accounts for over 36% of GDP and employs about 35% of the labour force. Although traditional industries such as iron and steel, chemicals and machinery account for almost half of industrial production, new industries are the more dynamic. Taiwan is one of the world's largest suppliers of semiconductors, computers and mobile phones. It is also the largest supplier of computer screens.
Services accounted for over 62% of GDP and employed nearly 70% of the labour force in 2022. Taiwan, which faces the continued relocation of large labour-intensive industries to countries where it is less costly, will need innovative changes to move to an economy based on more advanced technologies and services to support them. According to Taiwan's tourism bureau, the number of foreign visitors to Taiwan in 2019 hit a record 11.84 million, a 7% increase from the previous year, and since then the country was waiting for the world's borders to open again to international travel.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Value Added (in % of GDP)||n/a||n/a||n/a|
|Value Added (Annual % Change)||n/a||n/a||n/a|
Source: World Bank, Latest data available.
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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.
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.
- Kuomintang (KMT): centre-right, favours Chinese nationalism
- Democratic Progressive Party (DPP): centre, backs an independent Taiwan, has gained a significant number of parliamentary seats since 2012
- New Power Party: Centre-Left
- People First Party (PFP): liberal
- Green Party Taiwan: Centre-Left
- Minkuotang: Centre-right
- Labor Party : Far-Left
- New Party : Right-Wing
- For Public Good Party: Left-wing
- Social Democratic Party: Centre-Left
- Taiwan First Nations Party : Centre-Left
- Trees Party: Centre-Left, Environmentalist
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Latest Update: September 2023