Think tank raises Taiwan's 2026 GDP growth forecast to 7.56%

Taipei, April 24 (CNA) The Taiwan Institute of Economic Research (TIER) said Friday that it has raised its forecast for Taiwan's gross domestic product growth in 2026 to 7.56 percent, citing strong global demand for artificial intelligence as a key driver of exports and investment.

The revised forecast is up 3.51 percentage points from TIER's estimate made in January.

The new figure is closer to the Directorate General of Budget, Accounting and Statistics' forecast of 7.71 percent GDP growth for 2026.

TIER said robust demand for AI applications is expected to boost Taiwan's exports and industrial production, with semiconductor and ICT suppliers increasing capital expenditure to meet rising demand.

The think tank forecast Taiwan's goods exports to grow 27.11 percent in 2026, up from a previous estimate of 13.84 percent, while imports are expected to rise 21.22 percent, compared with an earlier projection of 10.64 percent.

Exports of goods and services are expected to increase 15.74 percent, up from the previous estimate of 7.22 percent with imports projected to grow 13.33 percent, an upgrade from the earlier forecast of 6.82 percent, TIER said.

Private investment is forecast to grow 4.42 percent in 2026, up 1.54 percentage points from the previous estimate, while fixed capital formation is expected to rise 4.13 percent, compared with an earlier forecast of 3.05 percent.

TIER also raised its forecast for private consumption growth to 2.60 percent, from a previous estimate of 2.50 percent.

TIER President Chang Chien-yi (張建一) said that despite disruptions caused by military conflicts in the Middle East, the think tank raised its GDP forecast significantly, as AI development is expected to remain a long-term driver of economic growth.

Chang added that the war in the Middle East could be a short-lived event.

Echoing Chang, Gordon Sun (孫明德), director of TIER's Economic Forecasting Center, said AI has boosted demand not only for chips, servers and electronic components, but also for related sectors, including office and factory development, as manufacturers expand investment.

"AI-driven exports and investments have become the biggest bright spot of Taiwan's economy," Sun said.

TIER said the war in the Middle East has pushed up global raw material prices, increasing Taiwan's import costs and adding upward pressure on inflation.

Despite this, government price stabilization measures are expected to keep import-driven inflation under control. Sun said TIER has slightly raised its forecast for Taiwan's consumer price index growth by 0.23 percentage points to 1.89 percent, still below the central bank's 2 percent alert threshold.

Sun added that as inflationary pressures are being driven by supply-side factors rather than demand, the government should lower commodity taxes and providing subsidies to ease pressure, instead of relying on interest rate hikes by the central bank.