DOMESTIC CONSUMPTION BECOMES THE ECONOMIC DRIVER

Impacted by the global economic downturn, Taiwan’s economy has contracted this year due to sluggish exports. The DirectorateGeneral of Budget, Accounting and Statistics estimates an economic growth rate of 1.42% in 2023, the lowest in nearly five years. As the effects of the pandemic recede, the stable domestic job market and the continuing increase in basic wages has helped support domestic consumption, which has become a primary driver of economic growth this year.

Following the reopening of borders, the anticipated return of international tourists has been hampered by the political tensions between Taiwan and China, which prohibit Chinese tourists from visiting Taiwan. In the first three quarters of this year, the number of visitors to Taiwan reached 4.36 million, with only 3% being Chinese tourists, indicating significant potential for recovery in the future. The total inbound tourist number is expected to reach 6 million in 2023, only about 50% of pre-pandemic levels.

CONSUMERS ARE BACK IN PHYSICAL RETAIL STORES

Driven by domestic consumption demand, retail sales in the first half of 2023 grew by 11.9%, a record-high growth rate. The main contributors to this growth were department stores and convenience stores. Department stores benefited from increasing sales of luxury goods and new store openings, recording a 23.5% growth compared with last year, with sales reaching NT$211.1 billion. Convenience store sales grew by 9.4% YoY in the first half of this year due to store expansions and the Online-Merge-Offline (OMO) channel strategy.