Despite tariff questions, Taiwan central bank raises growth estimate

Taipei, Sept. 20 (CNA) Taiwan will continue to face uncertainties caused by United States tariff policies, the central bank said recently, but that did not stop it from raising its forecast for Taiwan's 2025 gross domestic product (GDP) growth.

In a report released after a quarterly policymaking meeting concluded Thursday, the central bank said potential tariffs on semiconductors and other tech products under Section 232 of the U.S. Trade Expansion Act could have an adverse impact on Taiwan's tech sector.

Washington launched an investigation under Section 232 in April to determine the effects of imports of semiconductors on national security, with the possibility that import duties would be imposed to address any problems found.

The investigation has yet to be completed.

If the U.S. were to impose import duties on semiconductors and other tech gadgets, affecting global supply chains, electronic product prices would move higher and eventually squeeze Taiwan's exports, the central bank said.

That would hurt Taiwan given that the electronics sector serves as the backbone of the country's growth.

In the first eight months of 2025, the electronic component and information and communications/audio and video industries accounted for 42.2 percent of Taiwan's total exports of US$398.43 billion.

At its latest policymaking meeting, the central bank raised its GDP growth projection to 4.55 percent in 2025, up from the previous estimate of 3.05 percent made in June.

It attributed the upward revision to a better-than-expected export performance as demand for artificial intelligence applications continues to boom.

The central bank forecast 2.68 percent GDP growth for 2026.

While the White House has reached framework agreements on tariffs with its trading partners, details still have to be ironed out, leaving companies confused and unwilling to invest, causing a drag on the global economy, the central bank said.

Also causing uncertainty is that the world's major economies are divided on how to adjust their monetary policies, which normally direct fund flows and influence the global stock, bond and foreign exchange markets, the central bank said.

On Wednesday, the U.S. Federal Reserve cut its key interest rates by 25 basis points, but Taiwan's central bank did not follow, leaving interest rates unchanged Thursday for the sixth consecutive quarter.

The People's Bank of China continued to ease liquidity to boost the economy, while the European Central Bank put a rate cut on hold as it was still assessing inflation and economic data.

In its report, Taiwan's central bank said that due to weakening domestic demand, China continued to export products to ease a domestic supply glut, escalating competition in global markets that has undermined the global economy and hurt Taiwan's exports.

At a news conference held Thursday, Central Bank Governor Yang Chin-long (楊金龍) said a rate cut is not a cure-all economic solution.

He noted that the local high-tech sector was benefiting from strong exports on AI demand, but non-high-tech industries were fragile due to the impact of U.S. tariffs and China's dumping of products on the global market.