Taiwan’s current account surplus in the fourth quarter of last year increased from US$36.02 billion a year earlier to US$69.93 billion, a record high, data released by the central bank show. The change was mainly driven by an annual increase of US$37.9 billion in the goods trade surplus to US$63.64 billion, thanks to robust export growth amid sustained demand for artificial intelligence (AI) and other emerging technologies.
Last year, Taiwan registered a current account surplus of US$181.14 billion, as the goods trade surplus reached an all-time high of US$176.05 billion, the data showed. The figures underlined why the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Feb. 13 revised its GDP growth forecast for last year to 8.68 percent from the 8.63 percent estimate it made the previous month. The new figure represents the highest annual growth in 15 years, despite lingering external risks, including US tariffs and geopolitical tensions.
The DGBAS has also raised its economic growth forecast for this year to 7.71 percent, up from its previous estimate of 3.54 percent and far higher than market consensus. That is mainly owing to the strong demand for emerging technologies and applications, which has led to major global cloud service providers expanding AI-related capital spending, driving strong export growth for Taiwan’s electronics and information technology products. Meanwhile, semiconductor companies are also expanding and accelerating investment in advanced process technology and high-end assembly and testing capacity buildout.
At the same time, the DGBAS projected that the nation’s excess savings — gross domestic savings minus gross domestic investment — this year would hit a record of NT$8.46 trillion (US$269 billion), compared with an estimated NT$5.62 trillion last year. The DGBAS has said that the excess savings rate is estimated to jump to 26.03 percent this year from 19.61 percent last year. Theoretically, current account surplus and excess savings tend to move in tandem. However, the latter has expanded much faster in the past few years. After exceeding NT$3 trillion in 2020, Taiwan’s excess savings have accelerated to surpass NT$4 trillion in 2024 and NT$5 trillion last year, and are this year expected to grow more than NT$8 trillion.
Some critics have long viewed excess savings as idle funds and say an increase in excess savings reflects weakening domestic consumption and investment. However, the DGBAS’ latest data showed no signs of weakening domestic demand, with consumption projected to grow 4.05 percent to NT$12.95 trillion this year from NT$12.44 trillion last year and investment likely to increase 4.08 percent to NT$7.81 trillion from NT$7.42 trillion.
Therefore, with the AI boom, record-breaking exports and growth in tech firms’ capital spending, it is inappropriate to interpret the expansion of excess savings as a sign of insufficient investment momentum. On the contrary, Taiwan’s excess savings reflect the economy’s resilience against international macroeconomic uncertainty and are big enough to support overseas investments by Taiwanese enterprises, as well as bolster domestic financial markets in countering volatility from capital inflows and outflows by foreign institutional investors.
Nevertheless, with the DGBAS projecting the excess savings rate at 26.03 percent and the gross domestic investment rate at 24.07 percent this year, it does suggest the nation is generating capital at a rate higher than it spends. That implies two things: First, even though investment momentum is not weakening, particularly in the semiconductor industry, domestic investment growth does lag behind export growth. Second, if such funds are not directed toward real production activities, but instead flow to financial speculation, they could pose a risk to the economy’s healthy, long-term development.
Looking ahead, while US tariffs remain an uncertainty and geopolitical pressure continues to reshape supply chains, international AI-related capital spending, favorable global economic conditions and domestic investment support measures remain key factors in driving growth in Taiwan’s current account surplus and excess savings. The catch is that market expectations for AI industry growth are increasingly mixed, with more investors growing weary that a massive run-up in spending on AI hardware might not be sustainable. As no one knows how long the AI wave can last, policymakers and industries must carefully adopt strategies to align with the new macroeconomic environment.
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