CIER raises Taiwan economic growth forecast to 7.22% on AI demand

Taipei, April 17 (CNA) The Chung-Hua Institution for Economic Research (CIER) on Friday raised its 2026 economic growth forecast to 7.22 percent, citing strong artificial intelligence (AI) demand despite disruptions from Middle East conflicts.

The latest forecast represents a sharp upward revision from the institution's January projection of 4.14 percent. CIER also forecast growth of 3.4 percent for 2027, up from 2.95 percent previously.

The institution raised its 2026 consumer price index (CPI) growth forecast to 1.98 percent, and 1.83 percent for 2027, citing inflationary pressures from Middle East tensions. The 2026 figure is close to the 2 percent inflation warning threshold.

CIER President Lien Hsien-ming (連賢明) said Taiwan's exports remain strong, particularly in AI-related products, with first-quarter economic growth expected to exceed 13 percent.

CIER described Taiwan's economic outlook as "externally hot, internally moderate."

In terms of international demand, while the Middle East conflict has affected commodity trade and transportation, the AI sector continues to expand, said CIER.

Exports and imports of information and communications technology, electronic and semiconductor products are expected to grow steadily, with export growth projected at 19.83 percent and import growth at 18.24 percent, according to CIER.

On domestic demand, private consumption is expected to grow 2.16 percent this year, supported by an improving labor market and stock market-driven wealth effects, outpacing last year, CIER added.

Lien said the forecast is based on assumptions adopted by international institutions, including that the Middle East conflict will not be prolonged and global oil prices will peak in April.

However, he said the war could affect energy and supply chains, with potential spillovers into interest rates. These uncertainties make forecasting more difficult.

The duration of the conflict, whether domestic energy prices remain capped, and the extent of government intervention will be key factors shaping inflation, Lien said.