Think tank raises Taiwan's GDP growth forecast to 4.05% for 2026

Taipei, Jan. 26 (CNA) The Taiwan Institute of Economic Research (TIER) on Monday raised its forecast for Taiwan's gross domestic product growth in 2026 to 4.05 percent, citing demand for AI and a recovery in private consumption.

TIER, one of the leading think tanks in Taiwan, raised the country's GDP growth forecast by 1.45 percentage points from its previous estimate in November.

Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, told reporters that the upgrade largely reflects an improvement in private consumption supported by wealth effects created by the booming stock market and an increase in car sales.

TIER has forecast that private consumption will grow 2.50 percent, up from the previous estimate of 2.00 percent.

Echoing Sun, TIER President Chang Chien-yi (張建一) said after striking a trade deal with Washington to lower tariffs on Taiwanese goods, import tariffs on cars imposed by Taiwan will inevitably be cut, which could boost domestic car sales.

Chang said strong global demand for AI applications is expected to lead to Taiwanese tech firms investing more to cater to foreign buyers. In addition, the cut in U.S. tariffs from 20 percent to 15 percent without stacking them on existing most-favored-nation rates is likely to help old economy industries.

As a result, TIER has upgraded its forecast for Taiwan's private investment growth from 2.36 percent to 2.88 percent for 2026 with fixed capital formation growth forecast also raised from 2.15 percent to 3.05 percent.

In addition, the think tank has also raised its forecast for growth in Taiwan's exports of goods and services from 3.08 percent to 7.22 percent and import growth from 2.84 percent to 6.82 percent for 2026.

TIER left its forecast for inflation in 2026 unchanged at 1.66 percent, saying falling international crude oil prices and steady services costs will stabilize the local consumer price index, but climate change, a labor shortage and geopolitical unease could become negative factors.

The think tank also released data showing that the December composite index for the manufacturing sector, which gauges business sentiment among local manufacturers, rose 3.61 point from a month earlier to 97.22, marking the sixth consecutive month of growth.

In addition, the December composite index evaluating business sentiment in the service sector also rose 1.21 points from November to 96.94, the third straight month of growth, while the composite index for the construction industry rose 2.31 points to 102.45, ending an 11-month falling streak.