Think tank raises forecast of Taiwan's 2025 GDP growth to 3.42%

Taipei, Jan. 24 (CNA) The Taiwan Institute of Economic Research (TIER) on Friday said that it had raised its forecast for Taiwan's 2025 gross domestic product (GDP) growth to 3.42 percent, citing positive factors including increasing investments, solid private consumption and stronger exports.

TIER, one of the leading economic think tanks in Taiwan, said the country is expected to see its GDP growth hit 3.42 percent in 2025, an upgrade of 0.27 percentage points from the previous estimate of 3.15 percent made in November.

The latest GDP growth forecast showed TIER is more upbeat than the government as the Directorate General of Budget, Accounting and Statistics (DGBAS) anticipated in late November that Taiwan's economy will grow 3.29 percent.

According to TIER, Taiwan's GDP is estimated to grow 2.01 percent in the first quarter, 2.95 percent in the second, 3.95 percent in the third and 4.65 percent in the fourth.

TIER Economic Forecasting Center Director Gordon Sun (孫明德) said investment, private consumption and export performance will serve as three pillars of Taiwan's economic growth for 2025.

"The three factors are just like three hits in a baseball game to support Taiwan's economy," Sun said, adding in the previous years, only part of these helped Taiwan hit a home run economically.

On the back of a continued boom era of artificial intelligence applications, TIER said, Taiwan's exports in goods and services will grow 6.05 percent from a year earlier in 2025, compared with an estimate of a 4.68 percent increase made in November.

However, TIER said the strength of Taiwan's export growth will continue to appear uneven with old economy industries staying haunted by a production glut in China and escalating price competition.

In 2025, Taiwan's import growth is expected to hit 6.27 percent from a year earlier compared with the previous estimate of 5.27 percent, according to TIER.

Due to strong demand for AI, TIER said, Taiwanese chip suppliers will remain keen to expand production so that private investments are expected to grow 5.66 percent in 2025, up 0.86 percentage points from the previous estimate.

Fixed capital formation is expected to grow 5.95 percent in 2025, compared with the previous estimate of 4.93 percent, according to TIER.

While private consumption is expected to stay strong in 2025, due to a high comparison base over the previous year, Taiwan is expected to see growth hit 2.11 percent this year, a slight cut from the previous estimate of 2.26 percent, TIER said.

TIER raised its forecast of Taiwan's consumer price index growth to 1.95 percent for 2025, up 0.08 percentage points from the previous estimate, saying the country will still face inflationary pressure.

TIER President Chang Chien-yi (張建一) said the move by the Legislative Yuan to cut NT$100 billion (US$3.08 billion) in aid for the state-owned Taiwan Power Co., which has sustained huge losses in recent years, could lead the company to raise electricity rates, which could become one of the factors to push up inflation.

While Taiwan's economy will stay stable in 2025, Sun said, the global economy will face tremendous challenges, in particular new policies of the second term of U.S. President Donald Trump, possible adjustments to the monetary policies of the major central bank and likely stimulus economic measures from China.