IMF sharply raises Taiwan's 2026 GDP growth forecast to 10.7%

Washington, Oct. 12 (CNA) The International Monetary Fund (IMF) has sharply raised its forecast for Taiwan's 2026 gross domestic product (GDP) growth to 10.7 percent, the highest projected rate in the Asia-Pacific region, amid the ongoing artificial intelligence (AI) boom.

In its latest World Economic Outlook report released Monday, the IMF raised its forecast for Taiwan's growth from the 5.2 percent it projected in April, making Taiwan the only economy worldwide projected to post double-digit growth this year.

Taiwan's projected growth far outpaces that of neighbors in the Asia-Pacific region, including Japan at 0.7 percent, South Korea at 3.3 percent, Singapore at 5.0 percent and Hong Kong at 3.8 percent.

China's economy is expected to grow 4.5 percent in 2026, while the United States is forecast to grow 2.3 percent.

Despite the significant upgrade, the IMF's latest forecast remains below the 11.05 percent growth projection released by Taiwan's Directorate General of Budget, Accounting and Statistics (DGBAS) in August.

According to the IMF, global AI development has remained highly concentrated, both upstream, in the computing hardware required for AI training and inference, and downstream, in developing and operating frontier AI models.

Upstream, only a few economies produce advanced semiconductors on a large scale, the IMF said, adding that Taiwan and South Korea account for 62 percent of net trade in AI-related computing hardware.

"Given the structure of supply chains for technology exports from these two economies, a handful of commodity exporters and other manufacturing hubs in East Asia are likely to see spillovers from this activity," the IMF said.

Reflecting Taiwan's strong export performance, the IMF projected that the island's current account surplus would reach 22.0 percent of GDP in 2026, among the highest of any major economy.

The IMF also forecast that Taiwan's consumer price index (CPI) would rise 2.0 percent in 2026, up from its April estimate of 1.5 percent, while the unemployment rate was projected to remain largely unchanged at 3.4 percent.

"Two major transformative forces -- geopolitics and technology -- are reshaping the global economy, with their short-term impact gradually coming into view and their longer-term impact still largely unknown," the IMF said in the report.

However, "technology is most recently playing out as a positive demand shock powered by investment in AI and related hardware and infrastructure," the IMF said. "Trade flows show this most strikingly."

Emma Rafaelof, an economist at the U.S.-based Semiconductor Industry Association, recently told CNA that she was optimistic about AI's continued growth, adding that cross-border cooperation would be needed to capitalize on the trend.

She urged the United States, Taiwan and other economies to work together to support AI's expansion.