Central bank raises Taiwan's GDP growth forecast to 7.31% for 2025

Taipei, Dec. 18 (CNA) The Central Bank of the Republic of China (Taiwan) on Thursday raised its forecast for Taiwan's gross domestic product (GDP) growth to 7.31 percent for 2025, citing a boost in exports on the basis of strong global demand for emerging technologies.

The latest forecast represents a significant upgrade from the previous estimate of 4.55 percent in September and came closer to the Directorate General of Budget, Accounting and Statistics's (DGBAS) forecast of 7.37 percent.

The central bank released its latest forecast after wrapping up a quarterly policymaking meeting where the bank also decided to leave its key interest rates unchanged for the seventh consecutive quarter, citing the stable economy and tamed inflation.

The upgrade in GDP growth for 2025 came after Taiwan posted a better-than-expected increase of 7.18 percent in the first nine months of the year, the central bank said, adding that growth has been also helped by rising private investments and consumption.

The central bank said while emerging technology will continue to boost Taiwan's exports in 2026, a relatively high comparison base in 2025 is expected to moderate GDP growth to 3.67 percent next year, emphasizing that growth in 2026 will remain stable.

In addition, the central bank has also lowered its forecast of consumer price index (CPI) growth from 1.75 percent to 1.66 percent for 2025, and cut core CPI growth from 1.67 percent forecast to 1.65 percent.

The central bank said the cuts came after the government lowered commodity taxes for certain goods and the prices of certain foods, including fruit and vegetables, have shown signs of stabilizing.

With international crude oil prices forecast to move lower next year as well as service expenses expected to decline, the CPI growth and core CPI growth are likely to moderate further to 1.63 percent each in 2026, the central bank added.

At the policymaking meeting, the central bank did not ease the current seventh round of selective credit controls in the property market, noting that the measures have successfully controlled home mortgages.

According to the central bank, the ratio of home mortgages to total bank lending fell to 36.70 percent at the end of November from a recent high of 37.61 percent at the end of June.

The central bank said it will continue to review local banks in a bid to ensure they follow requirements to control lending to the property market.

The seventh round of selective credit controls imposed in September 2024 has resulted in a fall in transactions and a slowdown in the rise of housing prices. The latest selective credit controls have been described as the strictest measures the central bank has ever imposed to rein in market speculation.

Speaking with reporters, Central Bank Governor Yang Chin-long (楊金龍) noted that the bank has made a considerable effort to control housing mortgages since the government launched its "mortgage program 2.0" for the younger generation in August 2023.

Under the youth mortgage program, the ceiling for housing loans was set at NT$10 million (US$317,299), up from NT$8 million in an earlier program, while the maturity of a mortgage is set at a maximum of 40 years, longer than the 30 years in the previous program.

"It is not good to provide a home mortgage program that is too lose," Yang said.

However, he said the bright side of the program, which is scheduled to end at the end of July 2026, is that it allows the younger generation to secure loans to buy their own homes.

The Executive Yuan is expected to prudently review the program, while the central bank will come up with new measures in line with any policy changes by the government, Yang said.