Excess savings forecast to reach almost NT$4.8 trillion in 2025

Taipei, Aug. 19 (CNA) Taiwan is expected to report record excess savings of almost NT$4.8 trillion (US$160 billion) in 2025, thanks to a rapidly expanding current account surplus amid strong global demand for artificial intelligence applications, according to the Directorate General of Budget, Accounting and Statistics (DGBAS).

Data from the DGBAS showed Taiwan's excess savings are estimated to reach NT$4.79 trillion this year, up from NT$3.95 trillion last year, as exporters continue to benefit from strong global demand for emerging technologies.

Taiwan's excess savings breached the NT$3 trillion mark for the first time in 2020 hitting NT$3.17 trillion, and that growth accelerated in the following years with NT$4.79 trillion forecast in 2025, the DGBAS said, adding that the figure is likely to grow to about NT$5.1 trillion in 2026.

Excess savings refers to the difference between a country's gross domestic savings and gross domestic investments and serves as an indicator of idle funds. Whenever excess savings increases, a country is sitting on more idle money.

DGBAS Department of Statistics chief Tsai Yu-tai (蔡鈺泰) said Taiwan is an export-oriented economy and enjoys a long term current account surplus, which mainly measures exports and imports of a country's merchandise and services, so it is no surprise excess savings is growing.

Given the boom brought by the current AI era, in particular, Tsai said, Taiwan's excess savings are likely to continue to grow in 2025 and 2026.

According to the DGBAS, Taiwan's export of merchandise and services is expected to soar 23.74 percent in 2025 with a trade surplus of US$140.2 billion. The outbound sales are set to grow an additional 2.01 percent in 2026, increasing the trade surplus to US$150.9 billion.

Despite increasing excess savings, the DGBAS said Taiwan's investment rate, which is the ratio of investment to gross domestic product, is expected to remain at 26.27 percent and 26.62 percent, respectively, in 2025 and 2026.

Although the DGBAS appeared upbeat that global demand for AI gadgets will continue to push up Taiwan's exports and investments, Dachrahn Wu (吳大任), director of the Research Center for Taiwan Economic Development of National Central University, said he remains cautious as the U.S. job market has shown signs of slowing and inflation could accelerate in the second half of this year due to tariffs.

With the U.S. economy, the world's largest, showing signs of weakening, Wu expressed concern about global demand for AI applications and the possible impact on Taiwan's exports and economic growth.

In addition, as the United States is using its tariff policies to force Taiwanese manufacturers to invest in the U.S, market, the local manufacturing sector could scale back its investments in Taiwan, compromising the country's investment growth, he added.