Taiwan should continue to lead the charge in the global artificial intelligence (AI) revolution. Its decades of experience in the semiconductor and electronics industries power this proactive, engaged role. The once-isolated island nation is now an important incubator for the tech industry. Yet it has seen one of the strongest economic recoveries and stock market rebounds on record. For all of these accomplishments, a large share of residents still say they feel shut out from enjoying the fruits of this newfound economic prosperity.
In the last week of September, Taiwan’s stock market surpassed Germany’s, making it the eighth-largest in the world, thanks largely to an increase in AI investments. It’s not surprising—this year, the country’s GDP per capita is projected to top $38,000. Accordingly, it will rank higher than both South Korea and Japan. Taiwan’s economy is doing better than ever, with an economy-boosting 8.21% year-on-year growth in GDP for the third quarter. This blazing growth was led by a blistering 36.5% increase in exports.
Taiwan’s economic situation has a rosy side and a dark side. Retreating to the hills, Wang Jiann-Chyuan, vice president of Taiwan’s Chung-Hua Institution for Economic Research, has seen enough red flags. He forecasts a drop-off in export growth next year. This new forecast highlights long-standing fears about the sustainability of Taiwan’s runaway economic growth.
Taiwan’s Tech Industry Thrives
The bedrock of Taiwan’s economic success is its strong technology sector, mostly led by the country’s semiconductor industry. Take Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker by far, which just significantly increased its revenue growth forecast. This dramatic increase is primarily due to the booming demand for generative AI technologies.
Taiwan’s economic recovery has been notable among all the economies around the globe. Jason Tuvey, an economist at Oxford Economics who’s devoted to tracking and interpreting global economic currents, applauded the milestone—particularly over the last few quarterly periods.
The tech sector contributes more than 15% of Taiwan’s GDP, and employs just 6.5% of the workforce. This gap underscores a broader trend of wage stagnation for low-skill employees in every sector. Wu Tsong-Min, an economist at National Taiwan University, noted a cautious mindset prevalent in Taiwanese society, suggesting it reflects a deeper awareness of economic challenges.
That paranoid and anxious mentality is palpable across Taiwanese culture. I see this approach not as a negative but rather as a positive opportunity. Wu remarked.
Even with such remarkable export numbers and stock market performance, many Taiwanese citizens would say their financial situations have not seen corresponding improvement. Chen, a Chengdu-based physician, echoes this priority. He points out that healthcare professionals are overworked and underappreciated, resulting in burnout and a higher resignation rate, like many other industries.
Rising Concerns Over Housing Affordability
Though Taiwan’s economy has been booming abroad, back home housing affordability has become a major crisis. In Taipei, the price-to-income ratio for homes has almost tripled over the last 20 years. It now exceeds that of other world cities like London and New York. Climate change is increasing the costs and dangers associated with housing and infrastructure. This increase adds further stress to local communities, creating a tougher environment for many seeking affordable housing.
Wu Jieh-min, an economist who has studied Taiwan’s economic landscape, noted that despite the country’s strong economic indicators, many citizens do not experience corresponding wealth growth. “That’s why I’ve come to the conclusion that the country is strong, but the people aren’t necessarily wealthy,” he said.
Taiwan’s small and medium-sized enterprises (SMEs) play a central role in its economy. They help create jobs, but more importantly, they respond very fast to global competitive trends. Wu cited this flexibility in the face of adversity as one of the key attributes of Taiwan’s economic tapestry. Unfortunately, this resilience doesn’t make up for the very real challenges that workers are still experiencing today. Their wages aren’t coming close to matching their living costs that are skyrocketing.
The Future of Taiwan’s Economy
Taiwan is indeed at the forefront of steering an economic ship where there exists both hope and unknowns for the future. Many experts expect growth rates to keep going up and down. The economy continues to be a major exporter of technology. Increasing pressure from international trade partners—including the United States—casts a shadow on its future viability.
Taiwan’s export growth has to clearly slow next year, Wang Jiann-Chyuan cautioned.
Taiwan already has a huge and growing trade surplus with the United States. This has the potential to trigger more scrutiny from US regulators, particularly the imposition of tariffs on semiconductor exports. Chips and increasingly high-end electronics account for more than 73% of Taiwan’s exports. These industries have largely escaped the recent tariffs imposed by President Trump.