Taiwan raises 2026 GDP growth forecast to 9.64%, a high in 16 years

Taipei, May 29 (CNA) Taiwan's Directorate General of Budget, Accounting and Statistics (DGBAS) on Friday raised its forecast for gross domestic product (GDP) growth in 2026 to 9.64 percent on the back of stronger than expected global demand for AI.

The DGBAS increased its GDP growth forecast for the year by 1.93 percentage points from the previous estimate made in mid-February. If the figure is realized, it will represent the highest annual growth since 2010, when the economy grew 10.25 percent.

The forecast was revised upwards after Taiwan's economy grew 14.55 percent in the first quarter, the highest quarterly growth in 48 years, and 0.86 percentage points more than forecast in April, according to the DGBAS.

The DGBAS also upgraded growth forecasts for Taiwan's exports, private investment and private consumption in 2026.

With momentum in AI development accelerating, global demand for Taiwan-made high-end chips, servers and other key electronic components remained strong, the DGBAS said.

As a result, the DGBAS expects Taiwan's merchandise and service exports to grow by 19.93 percent in 2026, up 7.25 percentage points from the February forecast, while imports will grow 17.30 percent, up 8.24 percentage points from the previous forecast.

Tsai Yu-tai (蔡鈺泰), head of the DGBAS's Department of Statistics, said Taiwan's merchandise exports are expected to hit US$894.5 billion in 2026, with servers and related goods expected to make up almost 40 percent, up from about 30 percent in 2025, during the current AI boom.

Taiwan has built a comprehensive supply chain, and with production on the rise the country has seen its export growth momentum accelerate, Tsai said, adding strong outbound sales are boosting local investments.

To meet robust global demand for AI infrastructure, local enterprises in the semiconductors, IC packaging and testing and IC substrates sectors have been keen to invest more, the DGBAS said, forecasting private investments will grow 6.43 percent in 2026, up 2.19 percentage points from the previous forecast.

After taking into account public investments, the DGBAS said, Taiwan's fixed capital formation is expected to grow 5.83 percent in 2026, up 1.75 percentage points from the previous estimate.

A surging stock market and wage hikes have strengthened households' wealth effects and boosted disposable income, so consumption is expected to grow accordingly, the DGBAS added.

The DGBAS has predicted private consumption will grow 3.60 percent in 2026, up 1.09 percentage points from its earlier forecast.

Although military conflicts in the Middle East sent crude oil prices higher, the DGBAS said the government's price stabilization measures eased inflationary pressure. It also forecast that the local consumer price index will grow 1.93 percent in 2026, below the 2 percent alert set by the central bank, but still an increase of 0.25 percentage points from the previous forecast.