Think tank raises 2025 growth forecast to 7.25%, urges caution for 2026

Taipei, Dec. 23 (CNA) Taiwan's economic growth for 2025 was forecast at 7.25 percent on Tuesday by the Taiwan Research Institute (TRI), a sharp upward revision from its June estimate of 2.9 percent, though it also urged cautioned over economic conditions in 2026.

The TRI said that the market initially worried about the impact of U.S. tariffs, but during the suspension and negotiation period, Taiwan welcomed a wave of rush orders looking to avoid tariffs.

Meanwhile, the demand boom for artificial intelligence (AI) technology repeatedly drove exports for AI servers and information and communications products to record highs.

Profit gains in related industries have also spurred domestic investment, creating growth momentum through mutually reinforcing exports and investment, the institution said.

This growth model is expected to continue into 2026, the think tank said, forecasting 3.46 percent growth in 2026.

However, because exports are highly concentrated in certain industries and markets, Taiwan also faces economic risks, including a global economic slowdown, a cooling of the AI boom, and heightened geopolitical tensions, with the three factors closely intertwined, the TRI warned.

The long-term effects of U.S. tariffs will also weigh on the outlook, the institute added.

While global demand for AI and high performance computing will still be high, growth will be limited due to the high base in 2025, the TRI said.

On the domestic demand front, consumption momentum fueled by universal cash handouts is expected to extend into the first quarter of 2026, while strong profit prospects at AI-related companies are likely to boost wages and dividends, raising household disposable income and supporting consumption throughout the year. The institution forecast growth of 2.23 percent, an improvement from this year.