Taiwan's 2025 GDP growth upgraded to 5.45% on AI boom: CIER

Taipei, Oct. 17 (CNA) The Chung-Hua Institution for Economic Research (CIER) on Friday sharply raised its 2025 GDP growth forecast for Taiwan to 5.45 percent, citing ongoing strong demand for artificial intelligence (AI)-related products and continued robust exports.

The new projection represents a major upward revision from the 3.05 percent growth forecast made in July, making CIER the first major local think tank to lift its estimate above 5 percent.

CIER President Lien Hsien-ming (連賢明) said Taiwan's economy has performed "better than expected," echoing upbeat comments made at Taiwan Semiconductor Manufacturing Co.'s (TSMC) investor conference a day earlier.

According to CIER, first-half growth reached 6.75 percent, driven by accelerated shipments early in the year ahead of anticipated tariffs imposed by U.S. President Donald Trump and by surging global semiconductor demand fueled by AI applications.

Growth is expected to remain strong at 5.82 percent in the third quarter before moderating to 2.71 percent in the fourth, bringing full-year growth to 5.45 percent, CIER forecast.

While tariff risks persist, Lien described the think tank's outlook as "cautiously optimistic."

Inflation is projected to ease over the year, with the consumer price index (CPI) expected to rise 1.81 percent in 2025. The Taiwan dollar is expected to appreciate to an average of NT$30.91 per U.S. dollar, up 3.88 percent from 2024, as U.S. interest rates decline, the think tank said.

CIER noted that earlier forecasts were clouded by uncertainty over U.S. tariff policy, but subsequent trade negotiations and temporary tariff buffers have led to a stronger-than-expected rebound in global trade and industrial activity.

Taiwan's exports have surged through the first three quarters of 2025, supported by increased investment-related imports and growing exports of goods and services. For 2025, CIER expects exports to expand 26.59 percent and imports 27.3 percent.

Lien said ongoing U.S.-China tensions also continue to pose risks, though upcoming talks at the APEC summit may help clarify trade prospects. He cautioned, however, that trade negotiations often move slowly and outcomes remain uncertain.

Potential Chinese restrictions on rare earth exports would likely have a limited impact on Taiwan's semiconductor industry, however, as chipmakers are not major users of such materials.

Looking ahead, CIER forecast Taiwan's economy to grow 2.55 percent in 2026, moderating from this year's high base.