Taiwan ups 2026 GDP growth forecast to 11.05%, a 39-year high

Taipei, Aug. 14 (CNA) The Directorate General of Budget, Accounting and Statistics (DGBAS) on Friday raised its forecast for Taiwan's gross domestic product (GDP) growth in 2026 to 11.05 percent -- a 39-year high -- citing robust global demand for artificial intelligence (AI) applications.

The revised forecast is 1.41 percentage points higher than the agency's previous estimate. If realized, it would mark Taiwan's fastest annual growth since 1987, when GDP expanded 12.75 percent.

In the second quarter, Taiwan's GDP grew 12.93 percent from a year earlier, following first-quarter growth of 15.43 percent, according to the DGBAS.

The economy expanded 14.15 percent year on year in the first half of the year, the DGBAS said.

Tsai Yu-tai (蔡鈺泰), head of the DGBAS Department of Statistics, said Taiwan's stronger-than-expected exports, investment and consumption prompted the upward revision.

Driven by surging global interest in AI and increased investment in AI infrastructure by major cloud service providers, Taiwan's exports of goods and services are now forecast to grow 21.28 percent in 2026, up 1.35 percentage points from the earlier forecast.

Imports of goods and services are projected to increase 21.15 percent, 3.85 percentage points higher than previously forecast.

The DGBAS also projected merchandise exports to reach US$903.6 billion in 2026, up 41.19 percent, marking the fastest growth in 50 years.

Strong AI-related demand has prompted many Taiwanese exporters, particularly in the semiconductor industry, to increase capital spending. The DGBAS therefore raised its forecast for private investment growth to 11.58 percent, up 5.15 percentage points from its previous estimate.

Overall capital formation, including private and government investment, is expected to grow 10.09 percent in 2026, 4.26 percentage points above the earlier estimate.

The DGBAS also raised its forecast for private consumption growth to 4.76 percent in 2026, up 1.16 percentage points, citing gains in household wealth driven by a buoyant stock market and a stronger labor market.

At the same time, the agency forecast consumer price index (CPI) growth of 2.07 percent in 2026, attributing the increase to adverse weather pushing up food prices and rising prices for technology products caused by component shortages amid the AI boom. This exceeds the central bank's 2 percent inflation alert threshold.

Looking ahead, the DGBAS forecast Taiwan's GDP growth would moderate to 6.04 percent in 2027. Goods and services exports and imports are projected to increase 11.53 percent and 10.07 percent, respectively, as AI-driven growth remains strong. Merchandise exports are expected to total US$1.07 trillion, up 18.70 percent.

Inflationary pressures are expected to ease in 2027, with CPI growth forecast to slow to 1.90 percent, the DGBAS said.