Local think tank revises Taiwan 2025 GDP growth forecast to above 3%

Taipei, July 25 (CNA) The Taiwan Institute of Economic Research (TIER) revised upwards on Friday its forecast for Taiwan's economic growth in 2025 to 3.02 percent, on stronger-than-expected exports and private investments, despite uncertainty surrounding tariff talks with the United States.

The Taipei-based think tank's latest gross domestic product (GDP) growth forecast represents an increase of 0.11 percentage points from the previous figure released on April 25 due to better-than-expected economic data in recent months.

U.S. President Donald Trump shocked the world in early April when he announced his plan to impose sharply higher tariffs on foreign goods, but a 90-day halt in the policy allowed Taiwan to post double-digit year-on-year export growth, TIER said in its quarterly economic forecast.

During the first six months of 2025, Taiwan's exports grew 25.92 percent from a year earlier, thanks to strong demand for emerging technologies such as artificial intelligence (AI) and high-performance computing, according to TIER.

The strong sale of AI servers has also boosted private investment, with imports of capital equipment increasing more than 50 percent in June from last year and 90.4 percent for semiconductor manufacturing equipment, said Gordon Sun (孫明德), director of the TIER Economic Forecasting Center, during a news conference Friday.

This led TIER to revise its forecast for growth in private investment for 2025 to 6.04 percent, up 1.94 percentage points from three months ago.

TIER said it expects GDP growth during the January-June period to be above 5 percent, but below 1 percent in the second half of the year.

As to concerns about ongoing trade talks with the U.S., which has wrapped up negotiations with neighboring countries, such as Japan and the Philippines, Sun expects positive results.

The U.S. will impose 15 percent tariffs on imports from Japan, instead of the 25 percent announced by Trump, while the Philippines and Indonesia are set to see 19 percent import duties on goods shipped to the U.S., down from 20 percent and 32 percent, respectively.

However, the uncertainty has hit private consumption, Sun said, noting a decline in auto sales dragged down retail sales during the first six months of the year, which posted negative growth.

As a result, TIER lowered its forecast for growth in private consumption by 0.30 percentage points to 1.67 percent.

Weak domestic demand and a third consecutive monthly decline in the consumer price index (CPI) in June resulted in TIER cutting its forecast for the full-year inflation rate by 0.18 percentage points to 1.77 percent.

TIER also released business sentiment indicators for the manufacturing, service and construction sectors for June, which were compiled based on surveys conducted among businesses and the think tank's modeling.

The indicator for the manufacturing sector dropped 0.04 points to 85.88, which TIER said showed business sentiment was little changed, while indicators for the service and construction sectors moved higher after falling for five consecutive months.