Taiwan lowers 2025 GDP growth forecast to 3.14%

Taipei, Feb. 26 (CNA) Taiwan on Wednesday lowered its forecast for gross domestic product (GDP) growth to 3.14 percent for 2025 with the Directorate General of Budget, Accounting and Statistics (DGBAS), citing a relatively high comparison base in 2024, after the local economy recorded better than expected growth in the fourth quarter.

In addition, a cut in the government's general budget plan by the Legislative Yuan is expected to affect government investments and consumption, which also led the DGBAS to lower its forecast of 2025 GDP growth.

The DGBAS downgraded Taiwan's GDP growth forecast to 3.14 percent, a cut of 0.15 percentage points from the previous estimate made in November.

The downgrade came after the DGBAS raised its forecast of the country's economic growth by 0.32 percentage points to 4.59 percent for 2024 after growth in the fourth quarter hit 2.90 percent in a preliminary reading, 1.06 percentage points higher than the agency's advance estimate.

Despite the cut in the 2025 GDP growth forecast, the DGBAS said the local economy is still full of momentum in exports, private consumption and private investments.

Exports, private consumption

On the back of strong demand for emerging technologies such as artificial intelligence applications, Taiwan's exports of merchandise and services are expected to grow 7.61 percent in 2025, up 1.13 percentage points from the previous estimate, the DGBAS said.

In the wake of an increase in equipment needs for expansion to meet foreign demand, Taiwan's imports of merchandise and services are expected to grow 7.22 percent in 2025, up 0.26 percentage points from the earlier forecast, it added.

As the local job market remains stable, paving the way to pay hikes that will boost household disposable income, private consumption is expected to grow 2.12 percent in 2025, 0.03 percentage points higher than the previous estimate, the DGBAS said.

Investment

The booming AI era prompted many semiconductor suppliers to expand production and the DGBAS has raised its forecast of private investment by 0.61 percentage points from the previous estimate to 6.18 percent for this year.

With demand for high-end chips and servers booming on the back of the growing popularity of AI applications, Taiwan's export-oriented economy is expected to continue to benefit, the DGBAS added.

However, the budget cut led the DGBAS to lower forecast growth in government investments by 2.79 percentage points from the previous estimate to 6.3 percent, and the growth in government consumption by 0.06 percentage points to 2.91 percent for 2025.

Inflation

The DGBAS also raised its forecast of Taiwan's consumer price index (CPI) growth by 0.01 percentage points to 1.94 percent for 2025, though the figure was still below the 2 percent alert set by the central bank.

The slight upgrade in CPI growth reflects the higher cost of services such as dining out, medical fees and rent.

The agency noted that going forward the Trump administration's tariff policy could adversely impact trade activities and in turn hurt Taiwan's exports despite solid demand for emerging technologies.