Fitch forecasts Taiwan's growth to slow to 2.7% in 2026

Taipei, Aug. 26 (CNA) Fitch Ratings on Tuesday projected Taiwan's economy will slow to 2.7 percent in 2026 after expanding 3.4 percent this year, citing major downside risks from external factors.

The agency said growth could be pressured by a sharp slowdown among Taiwan's key trading partners, weaker global demand for artificial intelligence (AI), and uncertainty stemming from geopolitical tensions and U.S. trade policy.

Chen Yi-ju (陳怡如), the Asia-Pacific banking ratings deputy director at Fitch Ratings, told a news conference that the upgrade to the 2025 forecast reflected stronger-than-expected growth, as some industries front-loaded shipments due to tariff concerns.

Fitch also warned that Taiwan's traditional industries face mounting headwinds. Huang Hsiao-ting (黃筱婷), Fitch's senior deputy director of Asia-Pacific corporates, said the energy transition requires heavy capital spending, which increases credit risks, while the retail sector may be weighed down by weaker consumer confidence and intensifying competition.

While the sharp appreciation of the Taiwan dollar could erode profits for export-oriented industries by weakening price competitiveness, companies relying on imported raw materials and equipment could benefit from lower costs, she added.

Huang also pointed to excess capacity pressures in traditional industries as Chinese firms expand abroad and emerging Asian markets accelerate local industrial development.

Export-driven sectors, such as petrochemicals, chemicals and steel, may continue to face overcapacity, weak profitability and fragile cash flow, she said.