Fri, Jan 09, 2026 page9

• DBS forecasts 4.8 percent GDP growth

  LEADING THE PACK: Taiwan has ably surfed the AI boom to become the fastest growing economy in Asia as per capita GDP surpassed South Korea and Japan for the first time

  • By Crystal Hsu / Staff reporter
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  Singapore-based DBS Bank Ltd yesterday forecast Taiwan’s economy to grow 4.8 percent this year, the fastest among Asia’s newly industrialized economies, as sustained artificial intelligence (AI)-driven demand continues to underpin technology exports despite lingering trade and tariff risks.

  The outlook follows a standout last year, when Taiwan delivered one of Asia’s strongest economic performances, with GDP growth estimated at 7.2 percent, while the nation’s per capita GDP is projected to reach US$38,000, surpassing Japan and South Korea for the first time, DBS said.

  DBS economist Ma Tieying (馬鐵英) said AI-driven momentum is expected to persist this year, although growth is likely to moderate amid more realistic profitability expectations, elevated equity valuations and rising corporate leverage.

  

  Taipei 101 is seen among residential and commercial buildings in Taipei last year.

  Photo: AFP

  In its base-case scenario, DBS projects GDP growth of 4 to 5 percent, assuming AI demand remains solid, but cools, US semiconductor tariffs stay moderate and the US’ tariffs on Taiwan are slightly reduced through trade negotiations.

  In a more optimistic scenario, growth could climb to the 6 to 7 percent range if the AI-driven technology cycle evolves into a prolonged super-cycle and US tariffs are significantly eased or waived, Ma said.

  DBS expects the US tariffs on semiconductors to remain manageable, with exemptions likely for companies that commit to investing in the US, while a 40 percent increase in capital spending to US$602 billion by the world’s eight largest cloud service providers is expected to reinforce demand across Taiwan’s technology supply chain, the bank said.

  By contrast, Taiwan’s non-technology manufacturing is expected to remain weak, with exports continuing to contract amid the lingering possibility of tariffs, DBS said.

  While Taiwan-US trade negotiations might help reduce tariff rates, a full removal is unlikely, as the US administration retains alternative legal tools to maintain trade barriers, the bank said.

  On the other hand, Taiwan’s service-sector performance is expected to be mixed, Ma said.

  Consumer-related services might see a modest rebound, supported by government cash handouts, although gains could be capped by a softening labor market, she said.

  In particular, the financial sector faces slowing loan growth and potential equity-market corrections, partly offset by easing currency-hedging pressure on life insurance companies, she added.

  Overall, Taiwan remains well positioned to capitalize on the global AI wave while evolving into higher-value manufacturing and knowledge-based services, DBS said.

  The nation has diversified exports away from China, with the US already becoming its largest export market and ASEAN to overtake China this year, driven by strong shipments of information and communications technology products, the bank said.
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