Taiwan's 2025 economic growth forecast at 3.22% amid Trump presidency uncertainty

Taipei, Jan. 16 (CNA) Taiwan's economy is expected to grow 3.22 percent in 2025, according to the Chung-Hua Institution for Economic Research's (CIER) forecast released Thursday.

The institution's forecast was lower than its estimate of 4.3 percent growth for 2024, due to a higher base and rising global economic uncertainty, said CIER, one of Taiwan's leading think tanks. Final figures for 2024 have not yet been released.

At the 2025 Economic Outlook Forum held by the institution, CIER said one of the biggest uncertainties is U.S. President-elect Donald Trump's policies.

CIER President Lien Hsien-ming (連賢明) said there were four main things to look out for in terms of tariffs. The first is whether they are launched immediately, as Trump previously claimed.

The second is whether the full tariffs will be implemented immediately or gradually increased; and the third is whether the tariffs will be universal or differ among countries.

Lastly, as Taiwan's exports are primarily in information technology and largely tax-exempt, it will be crucial to monitor whether Trump decides to impose taxes on them, Lien said.

Despite the uncertainty, CIER was cautiously optimistic about Taiwan's economic outlook and said the 3.22 percent growth will come from both increasing overseas trade and demand in the domestic market.

Product and service exports are predicted to grow 5.56 percent, with private investments expected to rise 4.71 percent.

As for inflation, CIER predicted the consumer price index (CPI) to be 1.93 percent in 2025, lower than the 2 percent alert -- as long as utility rates do not increase.

Hsu Chien-ting (徐千婷), chief economist of Taiwan Cooperative Financial Holding Co., Ltd., said artificial intelligence (AI) will still be the dominant trend.

As Taiwan is the "core of the core" of AI, demand will lead to investments and exports, bolstering Taiwan's economy, she said.

On that note, CIER pointed out that the U.S. has been restricting exports of products like AI chips, and while Taiwan's chips are not restricted, exports to countries that are may be impacted.

On the other hand, other products relevant to AI and high-performance computing (HPC) face increasing demand and exports are expected to continue growing, CIER added.

Meanwhile, Lin Chi-chao (林啟超), chief economist at Cathay United Bank, said Trump is waging a "technology war" under the guise of a tariff war to create a gap between U.S. and Chinese technology.

The U.S. has already started trade investigations into China's mature process chips, due to global concern that China's production capacity for these chips could increase significantly, posing a serious challenge to production in other countries, Lin said.