The global race for artificial intelligence and the sweeping US trade tariffs under Donald Trump’s administration are not slowing Taiwan. The island’s self-governing democracy proves that the economy can thrive even under persistent military threats and amid rapid technological upheavals.
In the last two quarters, Taiwan has posted roughly 8% GDP growth, and forecasts for 2025 point to about 7.4% growth, sometimes even outpacing China.
“The Taiwanese economy has undoubtedly been one of the best-performing economies in the world, especially in recent quarters. Many people expected Taiwan’s economy to ride the AI boom, but perhaps many have not fully appreciated to what extent this will unfold.”
Taiwan’s Statistical Bureau on Friday reported an 8.21% year-on-year GDP growth in the third quarter, thanks to a 36.5% rise in exports for the period ending in September, after a strong 7.7% growth in the second quarter.
In October exports reached a record high: up 49.7% year on year – the widest monthly rise in more than 15 years.
Moreover, Taiwan became the eighth-largest stock market in the world in September after a surge in AI interest, surpassing Germany in total market size.
However, despite the economy’s bloom, many citizens do not reap the benefits of the boom: inequality is rising, and wages remain almost flat. Economists point out that growth is overly concentrated in certain sectors: electronics manufacturing accounts for more than 15% of GDP, but employment in this sector is only about 6.5% of the workforce.
A weak dynamic in consumer demand is reflected in a low level of consumer expectations over the year, and in turn – trade tensions with the United States due to the absence of a final trade agreement with Washington, reducing population optimism.
“From my perspective as an employee earning above the average wage, the economy isn’t actually doing that well.”
Forecasts suggest that GDP per capita this year will exceed $38,000, surpassing South Korea and Japan; however average real wages lag behind these countries by at least 30%, according to CNN’s calculations based on official data.
Taiwan’s economic heft has grown thanks to the semiconductor and electronics sectors. Tech giants such as Google, OpenAI, and Microsoft are rushing to deploy data centers powered by Nvidia and AMD GPUs, while Taiwanese companies remain at the forefront of semiconductor and server production needed to train AI models.
One vivid example is TSMC – the world leader in contract chip manufacturing, which supplies Nvidia. After beating expectations in previous quarters, the company raised its full-year revenue-growth forecast to the mid-30s percent range due to the explosive growth of AI.
Taiwan’s outward shipments to the United States rose by more than 63% in the first ten months of the year, underscoring the economy’s dependence on high-tech exports while also sharpening questions about its long-term resilience.
Researchers from the semi-official think tank Chung-Hua Institution for Economic Research, particularly its vice president Wan Chian-Chuan, warn that growth next year is likely to slow – from around 30% to single-digit values – as the base pace of expansion declines.
Although AI provides a powerful boost to the economy, it doesn’t make life easier for most people. They emphasize that growth is not distributed evenly, and the housing crisis and the high cost of living keep residents under pressure.
Many micro-groups and small businesses feel the squeeze from rising costs and competition from large tech giants, as well as from rising housing prices in Taipei, which are more than double the average income.
In this context, Taiwan continues to rely on the agility of small and medium-sized enterprises that quickly adapt to global trends – that is how its reputation in the semiconductor industry was born, and how its economy may develop in the future.
The outlook points to the importance of diversifying the economy and supporting mid-sized entrepreneurship to reduce dependence on a narrow sector and ensure more balanced growth for the population.
