Taiwan revises 2025 growth forecast to 7.37%, on rising AI demand

Taipei, Nov. 28 (CNA) Soaring demand for artificial intelligence (AI) is boosting both exports and investment, prompting the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Friday to sharply revise up Taiwan's 2025 economic growth forecast to 7.37 percent.

The DGBAS's latest projection was 2.92 percentage points higher than its August forecast of 4.45 percent, based on upward revisions to exports, imports, private consumption, and private investment for the full year.

If the forecast holds, it would mark Taiwan's highest growth in 15 years, second only to 2010's 10.25 percent.

Despite such a high base, the DGBAS projected 2026 growth to be at a healthy rate of 3.54 percent.

DGBAS Minister Chen Shu-tzu (陳淑姿) told reporters that the current economy is "rising steadily."

Tsai Yu-tai (蔡鈺泰), head of the DGBAS's Department of Statistics, attributed the sharp upward revision mainly to global demand for AI-related goods.

According to the DGBAS's latest forecast, merchandise exports are expected to reach US$624.9 billion this year and US$664.4 billion next year, up US$35.7 billion and US$62.3 billion, respectively, from previous projections.

Amid optimism over the AI boom, with major cloud service providers continuing to expand capital expenditures and boosting demand for Taiwan's chips, servers, and components, Taiwan's economic growth for 2026 is projected at 3.54 percent, as the AI momentum is expected to continue, he said.

He added that the 3.54 percent growth forecast for 2026 was "conservative," taking into account potential U.S. tariffs or other trade restrictions on semiconductors under the United States' ongoing Section 232 investigation.

For the 2025 forecast, the DGBAS expected that the NT$10,000 (US$317) cash handout to residents, which began earlier this month, will boost domestic consumption, while reductions in commodity taxes are likely to stimulate car sales.

As a result, private consumption is projected to grow 1.5 percent in real terms for the year, an upward revision of 0.65 percentage points from the previous forecast, the DGBAS said.

Tsai said that over 15 million people have received the cash handout so far, with its impact expected mainly in Q4 this year -- contributing about one percentage point to the projected 7.91 percent economic growth for the quarter -- and in Q1 next year.

Amid concerns over traditional industries, Tsai said that China's efforts to curb excessive competition could help ease pressures, which may in turn reduce the negative impact on Taiwan's supply chains and exports in affected sectors.

Li Chen-yu (李鎮宇), chief economist at Taishin Shin Kong Financial, said that the DGBAS's upward revision was expected, adding that the company had internally raised its growth forecast above 7 percent early this November.

The DGBAS's earlier forecast was relatively conservative because it expected this year's economic growth to be affected by U.S. tariffs; even in August, they projected growth at 4.45 percent factoring in early shipments, Li said.

Sun Ming-te (孫明德), director of the Taiwan Institute of Economic Research's Macroeconomic Forecasting Center, said he was "not surprised" by the DGBAS's higher projection, citing strong AI sales as the main driver.

Sun also said that the 2026 forecast "would not be overly optimistic," as he expected next year's domestic demand to exceed this year's. It would be supported by Taiwan's moderate easing since September and U.S. Fed rate cuts, which should boost consumption and economic momentum, he said.

However, he cautioned that several uncertainties remain, including shifts in U.S. President Donald Trump's policies, potential overheating in the AI investment boom, and possible new tariffs that could be imposed under the Section 232 investigation.