ECONOMY

Taiwan holds an important position in the global economy. It is a top player in the world’s information and communications technology industry as well as a major supplier of goods across the industrial spectrum.

According to the World Trade Organization, Taiwan was the 16th largest exporter and the 21st largest merchandise importer in 2023. It was also one of the largest holders of foreign exchange reserves as of December 2023. According to the International Monetary Fund, Taiwan’s gross domestic product per capita reached US$32,440 in 2023. In terms of nominal GDP, Taiwan ranks close to Poland and Switzerland, while its GDP per capita expressed as purchasing power parity is similar to that of Denmark and the Netherlands.

In 2023, global economic growth slowed down due to lower demand resulting from high interest rates, prolonged inventory reduction and geopolitical tensions. However, benefiting from reorganization of the global supply chain and emerging AI applications, Taiwan’s total exports and imports reached US$783.9 billion, the third highest on record. The 2023 figure declined by 13.6 percent, reflecting the effect of previous year’s high base. Specifically, exports and imports decreased by 9.8 percent and 17.9 percent, respectively.

Annual surveys of the world’s economies, including those conducted by the International Institute for Management Development and Business Environment Risk Intelligence, have ranked Taiwan among the top nations year after year with respect to long-term growth and technological development. Results announced in 2023 were no exception (see table “Global Survey Rankings” )

In July 2013, Taiwan signed an economic cooperation agreement with New Zealand, its first with a member of the Organization for Economic Cooperation and Development. An economic partnership accord was also inked with Singapore in November the same year, marking Taiwan’s first such pact with a trading partner in Southeast Asia. Both agreements exceed WTO commitments. Developments like these are expected to facilitate Taiwan’s participation in regional economic integration blocs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Regional Comprehensive Economic Partnership.

Taiwan signed economic cooperation agreements with Paraguay, Eswatini, the Marshall Islands and Belize in 2017, 2018, 2019 and 2020, respectively. These agreements are aimed at strengthening economic, investment, technological and trade ties while enhancing friendship with these countries.

Taiwan and the US signed the first agreement under the Taiwan-US Initiative on 21st-Century Trade in June 2023. The two countries also enhanced supply chain cooperation and energy transition through the Taiwan-US Economic Prosperity Partnership Dialogue and the Taiwan-US Technology Trade and Investment Collaboration. On Feb. 22, 2024, the two countries signed an MOU on international development cooperation, which advanced Taiwan’s collaboration with the US International Development Finance Corporation on private sector investment opportunities.

In 2016, the Taiwan government launched a new industrial development policy to expedite transformation and upgrades. This policy was the Five Plus Two Industrial Innovation Plan and became the key factor in driving industrial growth in next-generation smart machinery, Asian Silicon Valley, biotech & pharmaceuticals, green energy, national defense, new agriculture and circular economy.

In 2020, building on previous policies, six core strategic industries were identified to link Investing in Taiwan’s Three Major Plans of 2019. These were the information and digital, cybersecurity, precision health, national defense and strategy, green and renewable energy, and strategic stockpile industries. These will enhance Taiwan’s overall industrial development and create a better investment environment for sector transformation and upgrades.

The government is also promoting the Forward-looking Infrastructure Development Program to meet national infrastructure needs over the next 30 years. This program contains eight major elements: railway development, digital infrastructure, aquatic environments, food safety, green energy, urban-rural development, boosting birthrates and childcare facilities, and nurturing talent and employment.

As it works to advance innovative industries, the government is also committed to protecting the environment. With this in mind, the new economic model seeks to fully integrate industrial restructuring, national land-use planning and regional growth strategies to foster sustainable development while promoting the use of green energy resources.

In 2024, to strengthen the economy and industry, the government will develop the Five Trusted Industry Sectors, namely semiconductors, AI, military, security and surveillance, and next-generation communications. Small- and medium-sized enterprises will receive assistance to upgrade and transform, and inclusive growth, smart technology and sustainability will further raise Taiwan’s economic achievements.

In response to the advent of generative AI and the challenges of digital and net-zero industrial transformation, the government proposed an Asia Silicon Valley Development Plan 3.0 based on the existing foundation of the Asia Silicon Valley Plan. This focuses on technology development including AI, 5G and satellite networks to accelerate both digital and net-zero carbon industry transition. It aims to expand funding for startups over the next four years.

Through this approach, the government aims to raise wage levels and enhance regional development while mitigating global challenges and the prolonged US-China trade war. Measures are expected to improve industrial competitiveness and further bolster Taiwan’s economy.