Taiwan's economy set to grow 2.90% in 2025: Think tank

Taipei, June 14 (CNA) Taiwan's gross domestic product (GDP) is forecast to grow 2.90 percent in 2025 with the adverse impacts resulting from the Trump administration "reciprocal" tariffs expected to become more apparent in the second half of the year, according to the Taiwan Research Institute (TRI).

The TRI, one of the leading economic think tanks in Taiwan, said local economic growth is expected to slow down in the second half of the year as rush orders, which are flocking in with foreign buyers looking to avoid tariffs, likely to shrink as the United States' tariff policies become clearer.

U.S. President Donald Trump first announced reciprocal tariffs on April 2 on countries that have high trade surpluses with the United States. These included a 32 percent import duty on goods from Taiwan, but Trump announced a 90-day pause a week later to allow negotiations for a lower levy.

The TRI is more cautious than the government as the Directorate General of Budget, Accounting and Statistics (DGBAS) forecast in late May that Taiwan's GDP will grow 3.10 percent. Like the TRI, the DGBAS said Taiwan would have a much stronger first half with GDP growth likely to hit 5.35 percent. However, growth in the second half of the year was expected to slow down significantly to 1.00 percent.

After growing 5.34 percent in the first quarter in the preliminary reading, the think tank said, Taiwan's economy is likely to grow 4.95 percent in the second quarter, with growth expected to slow sharply to 0.78 percent in the third quarter and 0.84 percent in the fourth quarter.

TRI President Wu Tsai-yi (吳再益) said Taiwan is expected to face growing challenges in the second half of the year, experiencing a decline in orders.

Wu said he prefers to stay cautious about the local economy, waiting for the outcome of tariff talks with the U.S., watching closely how tensions between Washington and Beijing evolve and possible adjustments in the monetary polices of major central banks around the world.

According to the TRI, Taiwan's exports in merchandise and services are expected to grow 9.82 percent in 2025 on the back of solid global demand for emerging technologies such as artificial intelligence applications and high performance computing devices

Strong global demand for tech gadget prompted local manufacturers to invest more to boost production capacity, the TRI said, expecting private investment to grow 4.54 percent in 2025 with capital formation, which includes private and public investment, forecast to grow 4.57 percent.

The TRI said uncertainties over the global economy have sent ripples through the local stock market and dampened consumer sentiment this year as a result of which private consumption in Taiwan is estimated to grow only 1.50 percent.

Echoing Wu, TRI founder Liu Tai-ying (劉泰英), said an unpredictable Trump is expected to add more uncertainty to the global economy, while the weakness of the U.S. dollar has led to a stronger Taiwan dollar with foreign exchange losses expected to place pressure on Taiwan's exporters and life insurances companies which hold large foreign assets.

The TRI has forecast the exchange rate of the Taiwan dollar to the greenback will hit an annualized average of NT$30.69 in 2025, compared with NT$32.11 in 2024.

In addition, the think tank said the local consumer price index will grow 1.98 percent in 2025, below the 2 percent alert set by the central bank.