Taiwan’s economy grew 13.72 percent in the first half of 2026, the strongest first-half performance in 50 years, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported on Friday. Second-quarter gross domestic product rose 12.92 percent from a year earlier, the fastest pace for the April–June period in 39 years and 2.09 percentage points above the DGBAS’s May forecast, the agency said.

Exports, private consumption and capital formation all exceeded expectations in the second quarter, the DGBAS noted. Merchandise exports in U.S. dollar terms surged 43.73 percent year-on-year, lifted by strong global demand for AI-related electronics and information technology products. Private consumption rose an estimated 5.88 percent, the fastest rate in 11 quarters, supported by record stock market gains, a recovery in auto sales and robust travel demand. The agency said domestic demand had become an important growth driver alongside external demand.

Taiwan’s manufacturing sector mirrored the buoyant economy. The Taiwan Institute of Economic Research (TIER) reported that its composite business-climate indicator rose 1.08 points to 17.30 in June, staying in the “yellow-red” zone for a second consecutive month. The computer, electronics and optical products sector flashed a “red” light indicating overheating, buoyed by orders for servers, networking products and artificial intelligence infrastructure. The machinery sector also shifted from “yellow-red” to “red” as global semiconductor companies expanded capacity, boosting demand for automation equipment.

Despite the strong data, TIER warned that global uncertainties — including conflicts in the Middle East, fluctuations in international oil prices and ongoing U.S. tariff policies — could weigh on Taiwan’s outlook. However, the institute said the island’s role in global technology supply chains, coupled with sustained demand for AI, high-performance computing and cloud applications, should help offset some adverse effects. TIER expects Taiwan’s manufacturing sector to maintain steady growth, supported by the AI supply chain and improved competitiveness among traditional industries.