TIER raises Taiwan's 2026 GDP growth forecast to 10.38%

Taipei, July 24 (CNA) The Taiwan Institute of Economic Research (TIER) on Friday raised its forecast for Taiwan's 2026 economic growth to 10.38 percent, citing stronger-than-expected exports, investment and consumption fueled largely by artificial intelligence demand.

The revised forecast was 2.82 percentage points higher than the TIER's April projection of 7.56 percent and slightly above the 10.16 percent estimate issued by Academia Sinica on July 13.

At a news conference in Taipei, TIER said Taiwan's growth was becoming more balanced after being driven primarily by external demand in 2025, with exports, investment and private consumption all expanding.

"This year, domestic and external demand are balanced," said Gordon Sun (孫明德), director of TIER's Economic Forecasting Center.

Taiwan's merchandise exports rose 47.1 percent year-on-year in the first half of 2026, led by a 63.5 percent increase in electronics and information and communications technology products.

Exports of other products grew only 7.4 percent amid Chinese price competition and U.S. tariff pressure.

The TIER raised its forecast for real exports of goods and services by 5.5 percentage points to 21.24 percent.

Private investment growth was revised upward by 2.67 percentage points to 7.09 percent, reflecting semiconductor companies' expansion of their advanced process capacity and increased investment in Taiwan by international technology companies.

"Taiwan thrives on hardware, not software," Sun said, referring to the benefits generated by continued infrastructure spending among global cloud service providers.

The stock market's strong performance, rising travel demand and recovering automobile sales have also supported domestic consumption growth, Sun said.

The TIER raised its private consumption growth forecast by 1.13 percentage points to 3.73 percent in 2026.

TIER President Chang Chien-yi (張建一) said continued export strength and spillovers from the buoyant stock and automobile markets had contributed to the substantial upgrade.

"AI demand is truly very strong," Chang said, adding that Google's plan to raise capital expenditure indicated that hardware demand would remain robust.

The TIER also raised its forecast for annual consumer price index growth to 1.98 percent, as renewed U.S.-Iran hostilities pushed up energy prices.

Other inflationary pressures include tight supplies of AI-related components, possible agricultural disruption from a strong El Niño, and higher production costs resulting from deglobalization, the TIER said.

In its separate monthly business survey, TIER said the manufacturing composite index fell 1.14 points to 98.39 in June, ending two months of gains.

The service sector index rose 0.66 points to 100.12, its highest since August 2023, while the construction index climbed 5.33 points to 108.20 on continued work on technology plants and infrastructure projects.