Think tank raises Taiwan's 2024 GDP growth forecast to 3.96%

Taipei, Oct. 25 (CNA) The Chung-Hua Institution for Economic Research (CIER) has raised its forecast for Taiwan's 2024 gross domestic product (GDP) growth to 3.96 percent, citing booming demand for artificial intelligence (AI) applications.

CIER, a leading Taiwanese think tank, on Friday said the 3.96 percent GDP growth represents a 0.15 percentage point upgrade from its previous estimate of 3.81 percent in July.

The upward adjustment comes as booming demand for artificial intelligence (AI) applications drives up Taiwan's exports, which in turn helped boost investment and steady growth in domestic demand, CIER Chairman Lien Hsien-ming (連賢明) said.

Chiu Chiu-ying (邱秋瑩), director of the National Development Council's Department of Economic Development, said other institutions also recently revised up their GDP forecasts, largely because of Taiwan's booming export growth, which has the potential to reach a new annual high this year.

Citing the current weak demand for goods produced by traditional industries, Chiu said this is because the global economy still lacks sufficient recovery momentum, coupled with China's overcapacity problems.

However, with the U.S. Federal Reserve recently cutting its interest rates and China introducing various economic stimulus measures, Taiwan's traditional industries will hopefully see a rebound in export in the fourth quarter, she said.

Also on Friday, CIER said it revised up Taiwan's consumer price index (CPI), which it forecast will grow 2.17 percent in 2024, above the 2 percent alert set by the central bank.

In terms of its 2025 outlook, the think tank said with the global economic trend remaining flat and geopolitical risks still existing, Taiwan could see a GDP growth rate of 3.03 percent, with its CPI forecast to be 1.96 percent.

However, it also warned that although Taiwan's GDP growth is forecast to pass 3 percent, uncertainties in the monetary policies of major economies, China's economic growth and cross-strait relations, as well as the aftermath of the U.S. presidential election could still impact economic development.

Meanwhile, Lien said that although Taiwan's AI industry is developing well and will continue to grow next year, the growth rate is expected to be slightly reduced.

Yau Ruey (姚睿), an economics professor at National Central University, said as the Central Bank recently launched credit controls to cool the domestic housing market, these will likely impact Taiwan's economic growth, adding that further observations are needed.

Responding to CIER's reservations about the upcoming U.S. presidential election, Lee Chen-yu (李鎮宇), chief economist of Taishin Financial Holding, said many have speculated that should Donald Trump win, it could be bad news for Taiwan Semiconductor Manufacturing Co. (TSMC).

TSMC currently produces AI chips for a majority of AI chip designers from Nvidia Corp. to Advanced Micro Devices Inc., and the technology is a major factor in CIER raising Taiwan's GDP growth forecast.

Lee said he has a lot of faith in the world's leading contract chipmaker, and added that the company "could outlive Trump."

TSMC's technology advances are not expected to be easily surpassed over the next decade, he said, adding that as long as Taiwan stays ahead of Japan, South Korea and China, its position will not be challenged.