Taiwan central bank raises 2025 GDP growth forecast to 4.55%

Taipei, Sept. 18 (CNA) Taiwan's central bank announced Thursday that it has raised its forecast for the country's gross domestic product (GDP) growth to 4.55 percent for 2025, and it predicted economic growth of 2.68 percent in 2026.

Following a quarterly policymaking meeting, the central bank reported that the domestic economy received a boost from strong global demand for emerging technologies like AI and an increase in private investment, resulting in a 6.75 percent GDP increase in the first half of the year.

Given the relatively high comparison base from the same period last year, the central bank said, GDP growth is likely to slow to 2.51 percent in the second half of the year.

For the entire year, the central bank raised its GDP growth forecast for Taiwan to 4.55 percent, a notable upgrade from its estimate in June of 3.05 percent growth.

Despite the AI boom, the central bank said, the economy is expected to slow down in 2026 due to the high comparison base from 2025 and U.S. tariffs. It projected a "mild" GDP growth of 2.68 percent in 2026.

Inflationary pressure, which was exacerbated by higher food prices due to bad weather in the first half of the year, has shown signs of easing in the second half of 2025, according to the central bank.

The central bank has lowered its forecast for Taiwan's consumer price index (CPI) growth in 2025 to 1.75 percent, a reduction from its June estimate of 1.81 percent. The forecast for core CPI growth has also been revised downward to 1.67 percent from 1.69 percent.

In 2026, the CPI will grow by 1.66 percent and the core CPI will increase by 1.64 percent, the central bank said, citing a possible fall in international crude oil prices and a likely decline in domestic service costs.

In Thursday's meeting, the central bank decided to leave its key interest rates unchanged for the sixth consecutive quarter, keeping the discount rate at 2 percent, which remains the highest in 15 years.

In addition, the central bank decided not to relax its selective credit controls on the local housing market, despite calls from the market to ease mortgage rules.

In September last year, the bank introduced a seventh round of selective credit controls on the housing market, which property dealers called the most severe in history, further capping the mortgage lending for homebuyers, in an effort to rein in housing prices.

The central bank said Thursday that liquidity in the local banking system remained adequate to meet mortgage demand from homebuyers in the pre-order sales market.

According to the central bank, 15 major local banks have a total of NT$475.7 billion (US$15.86 billion) available for mortgages to homebuyers, while other banks, grassroots financial institutions, and life insurers are expected to provide additional funding in the housing market.

The current liquidity is sufficient to meet mortgage demand from homebuyers in the second half of this year, the central bank said.