Think tank raises forecast of Taiwan's GDP growth to 9.33%

Taipei, June 16 (CNA) The Taiwan Research Institute (TRI), one of the leading economic think tanks in the country, has raised its forecast of Taiwan's gross domestic product (GDP) growth to 9.33 percent for 2026, citing robust global demand for AI applications.

In a statement released Tuesday, the TRI said the new forecast represented a significant upgrade from the previous estimate of 3.46 percent that the institution made at the end of last year, as the local semiconductor and ICT industries are expected to get a significant boost from AI development.

The 9.33 percent growth forecast came closer to a similar upbeat forecast by the Directorate General of Budget, Accounting and Statistics (DGBAS), which raised its prediction to 9.64 percent in May, up significantly from the 7.71 percent forecast made in February.

While the global economy faced military conflicts in the Middle East, which have pushed up crude prices and inflationary pressure, the TRI said, strong demand for AI applications, high-performance computing and cloud-based data centers has offset the geopolitical impact.

The TRI said AI-related applications continue to lend support to Taiwan's exports, forecasting merchandise and service exports will grow 19.62 percent in 2026, compared with the previous estimate of 4.72 percent.

Imports of merchandise and services are expected to grow as well, at 16.34 percent, an upgrade from an earlier forecast of 3.75 percent, the TRI said.

The TRI said that with global demand for tech gadgets prompting semiconductor firms, AI server makers, and related manufacturers to expand production, Taiwan's private investments are expected to grow 6.16 percent in 2026, up from the previous estimate of 1.70 percent.

Taiwan's fixed capital formation -- which includes public and private investment -- are expected to grow 5.53 percent in 2026, compared with an earlier forecast of 2.10 percent, the TRI said.

The TRI said Taiwan is expected to depend on exports to drive up investments and income, which will in turn lift consumption.

In 2026, Taiwan's private consumption is expected to grow 3.51 percent, up from the previous forecast of 2.23 percent, the TRI said.

Still, the TRI warned that Taiwan's economy has been highly concentrated in the semiconductor and ICT industries, and if the high-tech sector faces headwinds, the negative impact on the local economy will be bigger than expected.

The institution said Taiwan should have measures to lead its industrial sector to grow in a balanced manner and should also enhance domestic demand, paving the path to an improvement in competitive edge and long-term growth.

Commenting on the high-flying stock market, TRI founder Liu Tai-ying (劉泰英) said he had faith in Taiwan's economic fundamentals and was optimistic about share prices.

Liu said a peace agreement announced by the United States and Iran this week has helped to stabilize international crude oil prices and reduce inflationary pressure.

He said if concerns over inflation are further eased, the U.S. Federal Reserve is likely to cut interest rates, which could lend support to global markets, including Taiwan's.