Central bank raises GDP growth forecast, leaves credit controls unchanged

Taipei, June 18 (CNA) Taiwan's central bank on Thursday raised its forecast for growth in the country's gross domestic product (GDP) to 9.45 percent for 2026, citing strong export momentum, while leaving selective credit controls on the housing market unchanged.

The bank said that with Taiwan expected to continue benefiting from the global artificial intelligence boom, it upgraded its GDP growth forecast from the previous estimate of 7.28 percent made in March.

The latest forecast brings the central bank's projection closer to those of other institutions, including the Directorate General of Budget, Accounting and Statistics (DGBAS), which has forecast GDP growth of 9.64 percent.

In a statement released after its quarterly policymaking meeting, the bank said robust external demand has prompted Taiwanese companies to expand production capacity, which is expected to boost private investment. Meanwhile, private consumption is also expected to continue growing and provide additional support for the economy, it said.

As for inflation, the central bank noted that international research institutions have raised their forecasts for crude oil prices amid tensions in the Middle East, pushing up Taiwan's import costs. Service-sector expenses in Taiwan have also continued to rise.

However, the bank added, the government's price stabilization measures are expected to help ease inflationary pressure.

The central bank slightly raised its forecast for Taiwan's consumer price index (CPI) growth from 1.80 percent projected in March to 1.91 percent. It also raised its forecast for core CPI growth, which excludes vegetables, fruit and energy prices, from 1.75 percent to 1.90 percent.

Both figures remain below the central bank's 2 percent inflation alert threshold.

At Thursday's meeting, the central bank also decided to leave interest rates unchanged for the ninth consecutive quarter.

The central bank said the decision reflected relatively mild domestic inflationary pressure and would help support steady economic growth and financial market stability.

However, the bank remains concerned about the buoyant stock market, where some investors have been borrowing heavily to increase their exposure to equities.

As such, it warned local banks against excessive credit expansion and urged them to strengthen risk management in preparation for potential market volatility.

In addition, the central bank decided not to further ease its selective credit controls after raising the loan-to-value ratio for second-home mortgages taken out by individual buyers from 50 percent to 60 percent in March.

According to the bank, home mortgages accounted for 35.2 percent of total lending by Taiwanese banks at the end of May, down from a peak of 37.6 percent at the end of June 2024, after it introduced a series of selective credit control measures.