AI boom sees TIER revise Taiwan's 2025 GDP growth forecast to 5.94%

Taipei, Nov. 6 (CNA) Strong global demand for artificial intelligence (AI) technology has prompted the Taiwan Institute of Economic Research (TIER) to nearly double its forecast for Taiwan's 2025 economic growth rate to 5.94 percent.

During a seminar in Taipei on Thursday, the local think tank announced it had raised its projection from 3.02 percent in July to 5.94 percent, attributing the sharp upgrade to robust American demand for AI technologies, which has bolstered Taiwan's exports and investment.

Figures released by the Directorate General of Budget, Accounting and Statistics (DGBAS) last month showed that third-quarter goods exports hit US$169.4 billion, surpassing earlier estimates by US$9.16 billion.

TIER President Chang Chien-yi (張建一) said the forecast was made conservatively given existing uncertainties, adding that with the government's NT$10,000 (US$323.4) cash handouts, growth could reach 6 percent.

TIER also raised its forecasts for export and real private investment growth to 24.98 percent and 10.97 percent, respectively, citing semiconductor manufacturers' ramp-up of advanced manufacturing and high-end packaging operations to meet surging global demand.

However, both the economic growth rate and export growth are expected to fall sharply to 2.60 percent and 3.08 percent, respectively, in 2026, due to the high base effect on electronics and information and communications products, TIER said.

Sun Ming-te (孫明德), director of TIER's Macroeconomic Forecasting Center, also warned of mounting concerns about a potential AI bubble, given that cross-investment among several tech giants has yet to yield any major breakthroughs.

"When a chicken is fed daily but seldom lays eggs, it's not a good sign," he said.

Asked about Taiwan's ongoing tariff negotiations with Washington, Chang said he expected the final rates to be set at 15 percent, the same level as those applied to Japanese and South Korean goods.

The White House announced in early August the imposition of a provisional 20 percent tariff rate on Taiwanese goods, while Japan and South Korea -- Taiwan's major competitors -- each face a 15 percent levy.

However, the 20 percent tariff on Taiwanese exports must be added on top of the products' original Most-Favored-Nation (MFN) rates and any applicable anti-dumping or countervailing duties, placing some Taiwanese companies at a severe competitive disadvantage.

Although U.S. President Donald Trump's tariffs could still be struck down by the Supreme Court, Chang cautioned that Taiwan "cannot be complacent," saying Trump would "definitely come up with other tricks."

Meanwhile, TIER forecast Taiwan's consumer price index (CPI) growth to slow to 1.70 percent in 2025, ending a three-year period during which the index remained above 2 percent. The CPI is projected to edge down further to 1.66 percent in 2026.