Manufacturers’ Business Sentiment in Taiwan Rises for Second Consecutive Month

Taipei: Business sentiment among Taiwan's manufacturers improved for the second consecutive month in August as concerns over U.S. tariff policies eased, according to the Taiwan Institute of Economic Research (TIER). According to Focus Taiwan, TIER data indicated the composite index for the manufacturing sector increased by 1.79 points from July to 88.88 in August. Additionally, the service sector index rose by 1.01 points to 88.64, while the construction sector index saw an increase of 2.66 points to 97.41. Gordon Sun, director of TIER's Economic Forecasting Center, noted that manufacturers had previously faced challenges from U.S. tariffs, a stronger Taiwan dollar, and oversupply issues in China. However, with the new tariffs implemented on August 7, a weakening local currency, and Beijing addressing production surpluses, sentiment has improved. A survey conducted by TIER revealed that 22.8 percent of manufacturers reported better business conditions in August, an increase from 17.7 percent in July. Conve rsely, the percentage of manufacturers reporting worsened operations decreased from 37.6 percent to 33.6 percent. TIER President Chang Chien-yi highlighted that the central bank recently revised its 2025 GDP growth forecast upwards to 4.55 percent from 3.05 percent, driven by strong demand for artificial intelligence applications. He also mentioned that a planned NT$10,000 (US$328) cash handout later this year could further boost GDP growth by 0.4-0.45 percentage points. Chang expressed optimism that GDP growth of 4.5 percent is achievable, with the potential to reach 5 percent. However, he cautioned that growth remains uneven, with traditional industries trailing behind the tech sector. Regarding tariffs, Chang emphasized that local manufacturers could plan future investments with certainty only when Taiwan and the United States finalize a deal to reduce the current 20 percent levy. Furthermore, TIER's composite index for the construction industry increased by 2.66 points from the previous month to 97.41 in August. However, TIER researcher Liu Pei-chen pointed out that the domestic property market shows no signs of significant recovery, with transaction volume and home prices likely to experience modest declines.