Taiwan’s economy continues to post strong growth, driven largely by its high-tech manufacturing sector. However, recent economic data indicate that traditional industries are facing slower growth, prompting industry groups and economists to call for a more balanced approach to industrial development.
A report released by the Taiwan Federation of Industries, based on a survey of 161 industry associations, found that government policies have placed significant emphasis on semiconductors and other high-tech industries in recent years. While this strategy has contributed to record export performance and boosted asset values, it has also widened the gap between technology-related industries and traditional manufacturing sectors.
According to the report, the rapid expansion of the technology sector has contributed to rising housing prices and wealth creation, while many workers in conventional manufacturing continue to experience relatively slow wage growth alongside increasing living costs. The federation suggested that long-term industrial development would benefit from a more balanced allocation of resources across different sectors.
Recent trade data illustrate this divergence. In July 2026, export orders for information and communications technology (ICT) products increased 89.5% year on year, while electronic products also recorded strong growth. In contrast, demand for products from traditional industries, including chemicals, plastics, and rubber, remained relatively weak, and orders for optical products declined by more than 10%.
Industrial production figures showed a similar trend. Output of computers, electronics, and optical products rose 95.62% compared with the previous year, while production in industries such as chemicals, fertilizers, and automobiles declined.
Taiwan’s labor market also reflects structural challenges. The unemployment rate among people aged 15 to 24 reached 11.71% in July, significantly higher than the overall unemployment rate. At the same time, 76.6% of industry associations surveyed identified labor shortages as their biggest challenge, marking the third consecutive year that workforce shortages ranked as the sector’s primary concern.
Economists noted that the coexistence of relatively high youth unemployment and widespread labor shortages suggests a mismatch between the skills employers require and those available in the labor market. As technology-driven industries increasingly demand specialized expertise, some job seekers may face greater barriers to entering these sectors.
Despite these structural issues, Taiwan’s overall economy continues to grow. Official data released in late July showed that the island’s gross domestic product (GDP) expanded 12.92% year on year in the second quarter of 2026, supported by continued growth in AI-related exports and investment.
However, stronger economic growth has not been fully reflected in consumer sentiment. Taiwan’s Consumer Confidence Index stood at 65.01 in August, remaining well below the level generally associated with consumer optimism.
The report also emphasized the close integration of industrial supply chains across the Taiwan Strait and highlighted the importance of the mainland market. It called for continued support for stable cross-Strait economic exchanges to help Taiwan businesses benefit from opportunities arising from the mainland’s economic development.
