CIER raises Taiwan's 2026 GDP growth forecast to 10.35%

Taipei, July 22 (CNA) The Chung-Hua Institution for Economic Research (CIER) on Wednesday raised its 2026 economic growth forecast for Taiwan to 10.35 percent, citing stronger-than-expected exports driven by artificial intelligence (AI) demand and resilient domestic consumption.

The revised forecast represents a major increase from the Taipei-based think tank's previous projections of 4.14 percent in January and 7.22 percent in April.

CIER is the second major domestic institution to forecast double-digit growth for Taiwan this year, after Academia Sinica increased its estimate to 10.16 percent last week.

Looking ahead, CIER raised its 2027 gross domestic product (GDP) growth forecast from 3.4 percent to 3.71 percent.

CIER said in a statement issued Wednesday that robust global demand for AI applications, high-performance computing and advanced semiconductor manufacturing kept AI-related exports growing at a double-digit pace in the first half of the year.

Meanwhile, expanding corporate investment and stronger consumer spending, supported by gains in Taiwan's stock market, have resulted in what it described as an economy boosted by strong external and domestic demand, it added.

The institute estimated net external demand will contribute 5.62 percentage points to GDP growth this year, while domestic demand will account for 4.73 percentage points.

CIER President Lien Hsien-ming (連賢明) said exports remain "extremely, extremely robust" and could top US$900 billion this year if current momentum continues.

CIER also raised its 2026 consumer price index (CPI) growth forecast to 2.02 percent, slightly above the 2 percent inflation warning threshold, citing higher oil prices stemming from tensions in the Middle East.

It expects inflation to ease to 1.89 percent in 2027.

Lien said the duration of the conflict in the Middle East is key to the inflation outlook, as prolonged fighting could keep energy prices elevated.

Meanwhile, Chu Jung (儲蓉), an independent director at Taiwan Finance Corp. and a member of CIER's forecasting panel, said Taiwan's economy is likely to grow between 9.64 percent and 10.2 percent this year under neutral-to-optimistic scenarios, supported by continued AI-driven growth.

However, she cautioned that the AI boom has widened disparities across industries and income groups, creating a "K-shaped" economy, though she added that growth in AI capital expenditure could moderate in the second half of the year as firms begin scrutinizing returns on investment.

CIER also forecast that the New Taiwan dollar will average NT$31.5 against the U.S. dollar this year, while noting that geopolitical developments and U.S. Federal Reserve policy remain key uncertainties.