The economy is set for its fastest expansion in 15 years, prompting Academia Sinica to sharply raise its growth forecast yesterday, as exports powered by surging global demand for artificial intelligence (AI) hardware proved far stronger than expected.
The research institute expects GDP growth to hit 7.41 percent this year, more than double the 2.93 percent projection it made in July.
The upgrade reflects stronger-than-anticipated overseas demand, particularly for AI-related applications, even as uncertainties surrounding US trade policy persist.
Photo courtesy of Academia Sinica
“Although clouds have not fully cleared, moonlight is already visible,” Academia Sinica Institute of Economics research fellow Lin Chang-ching (林常青) said, adding that robust external demand offsets lingering risks tied to US tariffs.
Exports are forecast to soar 32.09 percent this year, while imports are projected to rise 29.79 percent, underscoring the trade-led nature of the expansion.
Growth figures mask deep structural imbalances, Academia Sinica vice president Peng Shin-kun (彭信坤) said.
Expansion is driven overwhelmingly by exports and trade, with technology firms tied to the AI supply chain significantly outperforming the rest of the economy, Peng said, adding that traditional industries remain sluggish.
Such an imbalance helps explain why many households feel disconnected from the strong macroeconomic data, he said.
While industrial polarization is unlikely to have an immediate impact on GDP, it could weaken economic resilience and social stability over time, Lin said.
With non-tariff trade barriers expected to increase amid shifting global political and economic conditions, he urged the government to step up support for small and medium-sized enterprises.
Measures should include assistance with industrial transformation, compliance with international regulations and greater access to resources needed to compete globally, he said.
Academia Sinica forecasts consumer inflation of 1.67 percent this year and 1.6 percent next year, citing easing global energy prices and appreciation of the New Taiwan dollar.
The institute expects the local currency to strengthen versus the US dollar as the US Federal Reserve moves toward interest rate cuts and Taiwan’s widening trade surplus add upward pressure.
Academia Sinica projects economic growth of 3.71 percent next year, the most optimistic forecast among domestic research institutions.
Investment by US cloud-service providers would continue to support Taiwan’s exports next year, although growth momentum is likely to moderate as high base effects and the delayed impact of US tariffs take hold, it said.
Export and import growth rates are expected to slow next year to 8.41 percent and 8.2 percent respectively, it said.
The institute identified major sources of uncertainty including US monetary and trade policy, the uneven recovery of China’s economy, geopolitical tensions and ongoing supply-chain restructuring, and inefficiencies in domestic labor and capital allocation.
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