Benefiting from robust demand in the artificial intelligence and semiconductor sectors, Taiwan's economy posted strong performance in the first half of the year, yet the experience across different industries and demographics shows a stark divergence.
A recent editorial in a major Taiwanese business publication highlighted that the island is progressively forming a "twin-pace economy" pattern. This phenomenon describes a scenario where high-tech industries race ahead while traditional sectors stagnate, leading to pronounced differences in growth rates across various industries.
According to production index data from Taiwan's economic affairs authority, the first half of the year saw electronic components output surge by 20.81% year-on-year, while computers, electronic products, and optical goods manufacturing jumped by an impressive 81.85%. In stark contrast, the chemical materials and fertilizers sector contracted by 7.51%, with traditional industries like textiles, furniture, and plastic products also experiencing varying degrees of decline.
Numerous scholars have voiced concerns over this situation. Sun Zhi-li, president of the Taiwan Economic Research Association, noted that while AI-related exports and financial markets remain vibrant, demand in real estate and several traditional sectors is faltering. She described the economy as appearing like a "hot spring" on the surface, yet certain industries are caught in an "ice storm."
Chang Chi-lu, a distinguished professor of political economy at National Sun Yat-sen University, cautioned that if policymakers focus solely on the impressive figures from rising sectors while overlooking contractions in employment, investment, and demand elsewhere, they risk underestimating the structural pressures facing the real economy.
The Chinese National Federation of Industries' recent "2026 Industry White Paper" emphasized the need to address industrial imbalances, urging transformation to promote balanced development across all sectors.
The "twin-pace" divide is not confined to industries; it is increasingly reflected in income distribution as well. Statistics from Taiwan's Directorate-General of Budget, Accounting and Statistics reveal that in the first half of 2026, the proportion of employees earning regular wages below the average exceeded 70% for the first time, setting a historic high. The widening wage gap—driven by high earners in the tech sector inflating overall averages while a vast majority of workers remain below that benchmark—has become a pressing concern.
Wu Da-ren, a professor at National Central University, pointed out that Taiwan's service sector employs around 7 million people, far outpacing the AI-related workforce. He suggested that policymakers consider channeling additional tax revenues generated by the AI boom into bolstering the currently weaker service and traditional industries.
The editorial further argued that efforts should be directed toward accelerating the adoption of AI, digitalization, and automation in traditional industries and small-to-medium enterprises, transforming AI from merely an "export product" into a "productivity tool" for the broader economy.
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