Economic trends
After almost five decades of sound economic management, Taiwan has managed to go from an underdeveloped agricultural island, to an economic power that is a leading producer of high-technology goods. Taiwan has a dynamic capitalist economy in which the authorities' control of investment and foreign trade is gradually diminishing. Highly vulnerable to global economic shocks and fluctuations of the demand, the island was severely affected by the international financial crisis, with its economy contracting by -1.9% in 2009. TAfter a year of record growth in 2010 (10.7%), driven by an increase in exports, the economy maintained a more sustainable trend in 2011 (5.1%), however it slowed down at the end of the year. Due to its high exposure to the developments of the global economy, the island suffered from the economic downturn of its trading partners, especially of the eurozone. The expected decline in export is likely to inhibit growth in 2012, leaving the estimates at 3%.
The instability of global financial markets has again created difficulties for the Taiwanese economy. Monetary policy, which was tightened in 2010-2011 should again be relaxed and fiscal incentives introduced to compensate for the decline of exports. The recently reelected president Ma Ying-jeou has announced that the priorities of his second term would be to reduce social inequalities, create jobs, support innovation and guarantee a greater participation of Taiwan in the region's economic integration. In the long-term, Taiwan will have to deal with problems of population aging, low birth rate and diplomatic isolation.
The unemployment rate, which reached almost 6% in 2009, dropped to about 4.5% in 2011 and should continue to decline in 2012.
Main branches of industry
The agricultural sector contributes very marginally to the GNP and employs 5% of the workforce. Taiwan's main crops are rice, sugarcane, fruits and vegetables. Taiwan has limited natural resources and croplands are cultivated intensely.
The secondary sector accounts for a significant part of the GNP. Even though traditional industries such as iron and steel, chemical products and mechanics still account for almost half the industrial production, new industries are more dynamic. Taiwan is one of the world's biggest suppliers of semi-conductors, computers and mobile telephones. It is also the world's biggest supplier of computer monitors.
Services contribute about 70% to the GDP and employ slightly under 60% of the workforce.
The country, which has to deal with the continuous relocation of labor-intensive industries to countries where labor is cheaper (especially China), will have to rely on new conversions, in order to move from a high-technology based economy to a services oriented economy.
International trade
Foreign trade has been Taiwan's growth driver, representing almost 130% of the GDP (average of 2008-2010). Taiwan's economy remains very export-oriented, so much so that it depends on an open world trade regime and remains vulnerable to downturns of the world economy. The electronics sector is Taiwan's most important industrial export sector and also the one that receives most of the American investment. Taiwan, as an independent economy, became a member of the World Trade Organization (WTO) as the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei") in January 2002. Taiwan main exports partners are China, Hong Kong, United States and Japan. For more information, refer to the COMTRADE website. The island shows a surplus trade balance. Exports to China greatly increased in 2011, leaving the country with a comfortable surplus trade balance.
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Last updates: May 2012
