Taiwan: Strong 2Q GDP as domestic demand stepped up

Research evidence excerpt

Taiwan: Strong 2Q GDP as domestic demand stepped up

Tingting Ge Asia Pacific Economic Research J P M O R G A N(852) 2800-0143 31 July 2026

tingting.ge@jpmorgan.com

in nearly three years and contributing 2.6%pts to headline GDP growth. The strength

reflected positive wealth effects from record-high equity markets, a rebound in auto sales as

tariff-related uncertainty faded, and stronger promotional activity. Spending on ICT

products, leisure and entertainment and transportation all increased notably, along with a

surge in stock market turnover driving strong demand for brokerage and fund-related

services. Government consumption also provided a modest but stable 0.4%pt contribution to

growth. Together, consumption and investment contributed 7.0%pts, accounting for 54% of

headline GDP growth, the largest domestic demand contribution in five quarters.

Extended AI upcycle and domestic demand revival lift 2H outlook

June activity data paved the way for solid 3Q growth, with the AI-led expansion broadening

and domestic demand gaining traction. Industrial production significantly exceeded

expectations, with strength across both tech and non-tech sectors. Rising semiconductor

equipment imports, firmer machinery output, and tight inventories in key tech segments point

to a semiconductor capex upswing that remains firmly tied to the AI cycle. The cycle also

appears increasingly likely to extend into 2027 and beyond, supported by recent guidance

from TSMC and Hon Hai, which highlights improving demand visibility, sustained AI server

momentum, and a more aggressive capacity expansion pipeline across leading-edge

semiconductors and advanced packaging.

At the same time, domestic demand is showing clearer signs of revival. Retail sales