For proof that an economy can thrive even under constant military threats from a powerful neighbor and amid US President Donald Trump’s sweeping global tariffs, look no further than Taiwan.
The self-ruled democracy has logged roughly 8% economic growth for two consecutive quarters, a rare achievement for a developed economy and one that is projected to push its 2025 GDP growth close to 7.4%, even surpassing China’s.
“taiwan’s economy has clearly been one of the best performing economies in the world, particularly over recent quarters,” said Jason tuvey, an economist at Capital Economics. “Many people expected taiwan’s economy to benefit from the sort of AI boom, but maybe many underestimated to what extent it would do.”
Taiwan’s statistics bureau on Friday reported 8.21% year-on-year growth in GDP in the third quarter, driven by a 36.5% surge in exports in the period ending September. This followed an already striking 7.7% expansion in the second quarter.
In October, exports hit a record high, climbing 49.7% from a year earlier – the largest single month increase in over 15 years.Economists say a key reason is that the gains are highly concentrated. Electronics manufacturing accounts for more than 15% of GDP but employs just 6.5% of the workforce, according to Capital Economics.
This unevenness is partly reflected in sluggish consumer spending.Consumer confidence has remained subdued throughout the year, according to the index released by the Research Center of Taiwan Economic Advancement.Trump’s trade war has also dampened sentiment, economists say, particularly as Taiwan has yet to finalize a trade agreement with Washington.
“From my outlook as a salaried worker earning above the median income, I feel the economy isn’t actually doing that well,” said Vivian Chen, a nurse in the Southern port city of Kaohsiung.
Chen’s observations are echoed by many in the home of the global chip powerhouse.Taiwan’s GDP per capita is forecast to exceed $38,000 this year, outpacing South Korea and Japan. But its average wage lags both countries by at least 30%, according to CNN’s calculations of official data.
Taiwan’s tech prowess, built over decades in the chip and electronics industries, has positioned the island to benefit from the AI boom. As tech giants from Google and OpenAI to Microsoft rush to build data centers powered by graphics processing units designed by Nvidia and AMD, Taiwanese companies have been at the forefront, manufacturing the semiconductors and servers essential for training AI models.Taiwan’s outbound shipments to the US, where most of the AI data center expansions have occurred, have grown more than 63% in the first 10 months of this year, according to taiwan’s Ministry of Finance.
But questions have mounted about the sustainability of this export-driven boom, especially amid concerns that the AI frenzy could cool.
Taiwan’s export growth “will definitely come down next year,” said Wang Jiann-Chyuan, vice president of the semi-official thinktank Chung-Hua Institution for Economic Research. He expects growth to retreat from about 30% in recent quarters to single digits, as this year’s surge makes further expansion harder.
Trump’s shadow
Adding to the uncertainty is Trump, Wang said. Taiwan’s trade surplus with the US hit a record this year, raising the risk of scrutiny from a president who has made reducing trade deficits a central goal of his tariff campaign.
So far, chips and electronics, which made up more than 73% of Taiwan’s exports, have been spared from the levy. While Trump has repeatedly threatened triple-digit tariffs on semiconductors, he has exempted companies, including TSMC, that build manufacturing facilities in the United States.For Wu Jieh-min, a researcher at Taiwan’s top research institute Academia Sinica, however, part of the concern about the island’s economic future are associated with many Taiwanese people’s deep-seated insecurity about its political status. China claims Taiwan as part of its territory,despite having never controlled it,and has vowed to absorb it by force,if necessary.”I think the cautious, on-edge mindset you see across Taiwanese society is very obvious, and I actually see it as something positive,” said Wu, whose research focuses on political economy and sociology.
“We have to manage our own future very carefully,as even just surviving is already difficult for us,” he said.On the ground, some Taiwanese say the rosy headline figures don’t reflect their daily lives, like Chen, the nurse, who said salaries for health professionals feel stagnant.
“That’s why you hear doctors complaining about being underpaid,and why so many nurses are leaving the country or the industry altogether,” Chen said.
“people in Taiwan keep hyping themselves up, saying things like ‘We have TSMC,’ or boasting about how high the stock market is. But for many living here, their monthly pay stayed much the same,” she added.Wu Tsong-Min, an economist at National Taiwan University, though, notes that the night market boom isn’t necessarily indicative of a broader economic recovery. “It reflects a shift in consumer behavior,” he explained. “People are still cautious about spending on big-ticket items, but thay’re willing to indulge in affordable pleasures like street food and entertainment.”
this trend is echoed across Taiwan,with night markets in cities like Taipei,Taichung,and Kaohsiung also reporting increased foot traffic and sales. The resurgence of thes vibrant hubs is not onyl boosting local economies but also providing a much-needed sense of normalcy and community after years of pandemic-related restrictions.”Night markets are a part of taiwan’s DNA,” says Lin Mei-hua, a regular visitor to the Keelung night market. “They’re where you come to relax, socialize, and enjoy the best of taiwanese cuisine. It’s fantastic to see them thriving again.”
The government is also playing a role in supporting the night market revival, with initiatives aimed at promoting tourism and providing financial assistance to vendors. As Taiwan continues to navigate the post-pandemic landscape, the humble night market stands as a symbol of resilience, adaptability, and the enduring spirit of the Taiwanese people.
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