(Aug 14): Taiwan raised its growth forecast for the year to more than 10%, on track for the first double-digit increase since 2010, as the economy of the chip hub outperforms on artificial intelligence (AI).
Gross domestic product is expected to expand by 11.05% in 2026, the statistics bureau in Taipei said in a statement on Friday. That’s an upgrade over its earlier forecast and follows expansion of 8.76% last year.
The economy grew 12.93% in the second quarter, the bureau said, just nipping the 12.90% median prediction of five economists in a Bloomberg News survey.
Taiwan seems easily set to post one of the best performances by a major economy this year as the US and China tie their growth prospects to developing AI. Taiwan is also well ahead of projections for South Korea — another major beneficiary of the AI buildout — given that economists forecast its growth at 3.3% this year.
Taiwan’s eye-popping results are backed by so far insatiable demand for its high-tech products like semiconductors and servers required in AI. Underscoring that appetite, on Friday Taiwan said it expects exports to grow 41.19% this year, up from the previous figure of 39.77%.
It added that export volume was seen topping US$1 trillion (RM4.09 trillion) for the first time in 2027, when GDP was forecast to grow 6.04%.
On Monday, Taiwan Semiconductor Manufacturing Co reported a 45% increase in sales for July. And last month, the island’s biggest company and go-to chipmaker for Nvidia Corp and Apple Inc raised its spending and revenue projections for the year, underscoring confidence that torrid growth in demand would extend into 2027 and beyond.
The rapid economic expansion and returns from a stock market trading near a record have helped boost consumption in Taiwan. Last month, officials said a measure of private consumption rose at the fastest pace since the third quarter of 2023.
That picture, along with inflation hovering above the central bank’s 2% alert level, is increasing the likelihood that the central bank in Taipei turns hawkish soon — after the longest stretch of holds to its benchmark rate since 2019.
On Friday, Taiwan said the consumer price index was expected to rise 2.07% this year, versus an earlier prediction of 1.93%.
Before the data, Hyosung Kwon, Korea and Taiwan Economist for Bloomberg Economics, predicted that the monetary authority would boost rates by 12.5 basis points at its quarterly meeting in September.
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