Taiwan’s Emerging Economy and its Currency the New Taiwan Dollar

Taiwan, formerly known as Formosa, is an island located in East Asia in the Pacific Ocean off the coast of communist mainland China. The name Taiwan is also commonly used to refer to the Republic of China, which has almost all of its territory located on the island.

Historically, the Republic of China’s governance included mainland China until the communist takeover in 1949 left the ruling Kuomintang or KMT in charge only of Taiwan and some small islands. The mainland based People’s Republic of China still does not recognize Taiwan and claims its territory.

Taiwan was governed under the KMT after 1928, although a multi-party democratic system evolved in the 1980’s and 1990’s. The country’s constitution was established in late 1947. Taiwan’s head of state is the President and the country has a single house legislature known as the Legislative Yuan.

Most of the country’s population adheres to a combination of religions, including ancient Chinese polytheism, Buddhism, Confucianism and Taoism, although a minority of Christians and Muslims are represented.

Taiwan has little ethnic diversity, with the largest ethnic group consisting of Han (98%) that can be further broken down into Hoklo (70%), Hakla (14%) and Mainland Chinese (14%). An additional 2% are native Taiwanese.  make up just over 28% of the population as of the 2000 census. The national language of the country is Filipino that is based on the Tagalog language.  

Other ethnic groups present include the Cebuano (13%), Ilocano (9%), Bisaya/Binisaya (7.6%), Hiligaynon (7.5%), Bikol (6%) and Waray (3.4%), with the additional 25.3% being classified as Other.

Economic Overview of Taiwan

Taiwan is known as one of the Asian Tigers and has a developed capitalist economy that is predominantly market-based. The economy ranked 24th worldwide in 2010 in terms of its nominal GDP of $427.0 billion. The country also ranked 19th worldwide in 2010 in terms of purchasing power parity or PPP GDP that was then at $810.5 billion, and it showed an impressive annualized GDP growth of 10.5% in 2010.

Roughly 69.2% of the country’s GDP is produced by its services sector, with 29.2% from industry, and only 1.6% coming from agriculture as of 2009. Particularly important areas of industrial activity within the Taiwanese economy include: the manufacture of electronics, IT, arms, machinery, chemicals, pharmaceuticals, textiles, iron, steel, vehicles, cement and communications products, as well as food processing.

Inflation in Taiwan has recently been well below that seen in most industrialized nations, with its level measured at -0.87% in 2009. Furthermore, the unemployment rate among the Taiwanese population of roughly 23.1 million people in 2010 was measured at just 4.73% in late 2010.

Although Taiwan saw a reduction in growth in 2008 and 2009 during the global economic crisis, the country recovered well from this slowdown and continues to show considerable economic strength near the top of the more mature emerging markets countries.

The Taiwanese Currency – The New Taiwan Dollar

The currency used in Taiwan is known as the New Taiwan Dollar, and its ISO 4217 code is TWD. Each Dollar is further divided into 100 cents. The currency has been in use under that name as legal tender in Taiwan since 1949, when it replaced the depreciated Old Taiwanese Dollar in an attempt to quell hyperinflation that had troubled the country.

In terms of the Taiwanese currency’s availability to business loans, many online brokers do not yet accommodate offering the New Taiwan Dollar. Nevertheless, the currency is actively traded among the exotic currencies but tough to acquire small business loans using it.