Taiwan is gearing up for an upcoming election, which comes at a time of robust economic growth driven primarily by semiconductor exports. The country’s GDP growth rate is expected to reach 2.9 percent in 2024, rebounding from 1.2 percent in 2023. This growth is attributed to a recovering semiconductor cycle and increased demand for artificial intelligence.
During Tsai Ing-wen’s presidency, Taiwan witnessed economic growth above its potential, even amidst the challenges of the pandemic. The GDP expanded at an annual average of 4.2 percent between 2020 and 2022, peaking at 6.6 percent in 2021, with exports exceeding $446 billion. Notably, Taiwan has reduced its dependence on China, as its share in exports decreased from 40 percent between 2016 and 2019 to 35 percent in 2023.
This shift away from China is seen as a global trend rather than a specific policy directive from the ruling Democratic Progressive Party (DPP). The reluctance to invest in China is due to rising costs and geopolitical risks, particularly after the trade war and changing dynamics in the global landscape.
The semiconductor industry has been a key driver of Taiwan’s economic growth, representing around 15 percent of the country’s GDP. Taiwan plays a crucial role in the supply chains of leading technology companies worldwide. In 2022, semiconductor companies operating in Taiwan generated over $156 billion in revenues, with Taiwan Semiconductor Manufacturing Company (TSMC) leading the way.
While the next president inherits a resilient economy with low unemployment and high consumer spending, uncertainties persist due to the geopolitical risk associated with potential conflicts with China. Long-term foreign investments in Taiwan may be affected by these uncertainties.
Overall, Taiwan’s upcoming election takes place against a backdrop of strong economic growth, positioning the country for continued success in the coming years, supported by the thriving semiconductor industry and diversification away from reliance on China.
The source of the article is from the blog smartphonemagazine.nl