Taiwan's central bank downplays unbalanced economic growth fears

Taipei, June 20 (CNA) While Taiwan's tech sector remains the primary driver of local economic growth, exports from traditional industries have shown signs of recovery, the Central Bank of the Republic of China has said.

In a report released following its quarterly policymaking meeting on Thursday, the central bank said that while Taiwan's information and communications technology (ICT) sector and broader economy have benefited significantly from booming global demand for AI-related products, many traditional manufacturers have integrated into the AI supply chain through technology upgrades and product diversification.

Nan Ya Plastics Corp., for example, has stepped up production of materials such as glass fiber cloth used in AI-related applications, helping boost its exports by 13.04 percent in the first five months of this year, according to the Taiwan Stock Exchange.

Addressing concerns that Taiwan could be vulnerable to a form of "Dutch disease," where rapid AI-driven growth crowds out other sectors of the economy, the central bank argued that the country's situation differs significantly from that of the Netherlands in the 1960s.

The bank said Dutch manufacturing had limited links to the country's natural gas industry, reducing opportunities for technology spillovers.

By contrast, "Taiwan's traditional manufacturing industries have continuously enhanced their competitiveness and increased value-added production by integrating into the AI ecosystem," the central bank said.

"Taiwan's economic development bears no resemblance to the phenomenon known as 'Dutch disease,'" the central bank added.

Despite external headwinds, including Chinese dumping practices and U.S. tariffs, exports from Taiwan's traditional industries rose 7.7 percent in the first five months of this year, indicating a recovery from previous weakness, the bank said.

In the latest quarterly policymaking meeting, the central bank raised its forecast of Taiwan's gross domestic product growth to 9.45 percent for 2026, an upgrade of 2.17 percentage points from the previous estimate made in March.