Taiwan Exports

Economic growth decelerates in the second quarter of 2026

GDP reading: Taiwan's GDP expanded 12.9% in annual terms in Q2, following 14.5% growth in the prior quarter. Though down from Q1’s multi-decade high, the Q2 reading was still extremely elevated by historical standards and among the world’s fastest readings.

Export slowdown counterbalanced by stronger domestic demand: Relative to the previous period's data, readings in Q2 worsened for government consumption (+3.2% on a year-on-year basis vs +4.1% in Q1), exports of goods and services (+21.6% vs +35.8% in Q1) and imports of goods and services (+18.3% vs +26.3% in Q1). In contrast, the reading for private consumption improved in Q2 (+5.9% vs +4.7% in Q1), as did that for investment (+15.1% vs +5.9% in Q1). As a result, domestic demand contributed more than half of GDP growth for the first time since Q1 2025, signaling a broadening-out of the economic expansion.

Panelist insight: On the latest data, ING’s Lynn Song said: “The biggest surprise was that domestic demand actually contributed more to growth than net exports. Domestic demand added 7.00ppt to 2Q26 growth, thanks to a significant boost from gross capital formation (4.03ppt), as well as a strong read from private final consumption (2.57ppt). Taiwan's capital expenditure cycle, much like the rest of the world, is being driven by the AI infrastructure boom. Amid strong equity market performance in the first half of the year, Taiwan's consumption may have also been supported by positive wealth effects. Categories performing well included information and communication, entertainment, transport, and outbound tourism.” On the outlook, Nomura analysts said: “Taking into account the Q2 growth outturn and stronger investment growth, we raise our 2026 GDP growth forecast to a further above-consensus 12.5% y-o-y from 11.6%. We expect H2 growth momentum to remain solid owing to 1) the mass production of AI chips following the roll-out of NVIDIA’s new GPU (Vera Rubin) in H2, which should support export growth; 2) stronger capex to meet global AI demand; and 3) a continued recovery in consumption amid the AI uptrend.”

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