Taiwan’s economy remained firmly in expansion mode last month, as robust demand for artificial intelligence (AI) applications continued to drive exports, investment and domestic consumption, the National Development Council (NDC) said yesterday.
The council’s business climate monitoring indicator held steady at 39 points, maintaining the “red light” signal for a fifth consecutive month, suggesting sustained economic strength and above-trend growth.
The reading underscores Taiwan’s deep integration into the global AI buildout, driven by heavy investment from global cloud service providers and semiconductor customers seeking advanced computing capacity, NDC Department of Economic Development Director Chen Mei-chu (陳美菊) said.
Photo: CNA
Easing Middle East geopolitical tensions also helped stabilize sentiment, she said.
Taiwan has emerged as one of the biggest beneficiaries of the AI boom, with local companies supplying advanced chips, servers and related hardware to major US technology companies.
The rapid shift in AI — from generative models to agentic AI and robotics — has further broadened demand across the supply chain, she said.
Revenue and capital expenditure among the world’s largest cloud service providers rose in the first quarter, reinforcing expectations that AI-driven investment would remain a key growth engine, Chen added.
The trend is feeding through to manufacturing output, corporate investment and equity markets, while also spilling over into domestic consumption.
Construction activity continued to expand, as technology firms raised production capacity, while upbeat earnings guidance from the tech sector helped lift local stock prices, Chen said.
The leading index, which signals economic conditions over the next six months, rose 0.58 percent month-on-month to 103.63, the council said.
Six of its seven components posted gains, including floor area of construction starts, the stock price index, imports of semiconductor equipment and employment in the industrial and services sectors, it said
The coincident index, which tracks current conditions, climbed 0.84 percent to 107.57, with improvements seen in wholesale, retail and restaurant sales, electricity consumption, industrial production, manufacturing sales, and imports of machinery and electrical equipment, it said.
Domestic demand remained resilient, Chen said.
While AI-related activity continued to support wholesale trade, while record-high equity markets and holiday spending boosted retail and restaurant sales, she said.
Geopolitical tensions in the Middle East remain a risk, but the economic impact has so far been limited, Chen said.
Unlike the Russia-Ukraine war, global oil supply has stayed relatively stable due to higher US output and weaker demand from China, helping cap energy prices.
Taiwan’s export structure has also shifted toward higher-value advanced manufacturing, cushioning the economy from external shocks and reinforcing its role in the global AI supply chain, Chen said.
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