The Directorate-General of Budget, Accounting and Statistics (DGBAS) yesterday sharply raised its GDP growth forecast for this year from 4.45 percent to 7.37 percent, the fastest expansion in 15 years, thanks to strong global demand for electronics used in artificial intelligence (AI) applications.
The revised outlook marks the best performance since 2009 and represents a 2.92 percentage point jump from the agency’s August estimate, driven overwhelmingly by technology exports linked to AI, and new-generation smartphones and other mobile devices.
“The upgrade reflects much stronger second-half showings than previously projected,” DGBAS Minister Chen Shu-tzu (陳淑姿) said.
Photo: CNA
The economy grew 8.21 percent year-on-year in the third quarter, better than a 7.64 percent increase indicated in last month’s advance report, she said, adding that the outperformance stemmed mainly from aggressive capital spending by US hyperscale cloud companies on AI-related hardware, which benefited local suppliers.
These investments boosted third-quarter exports by 36.49 percent, while imports climbed 24.91 percent, as domestic tech manufacturers increased purchases of raw materials and equipment to satisfy customer needs, Chen said.
In all, external trade contributed 7.57 percentage points to third-quarter growth, the strongest contribution since 2008.
Meanwhile, private consumption provided only limited support, with household spending rising by 1.19 percent in the third quarter, and modest growth in domestic tourism and higher stock market turnover partly offset by sluggish retail and restaurant activity along with weak car sales, the DGBAS said.
Taiwanese spent 7.59 percent more on overseas travel, while domestic tourism spending rose only 0.76 percent, it added.
The economic growth momentum is expected to carry into the current quarter.
The DGBAS said it is looking at a fourth-quarter growth of 7.91 percent, far exceeding the previous projection of 1.61 percent.
Exports are forecast to surge 36.84 percent during the October-to-December period to US$172.3 billion, supported by sustained global demand for AI servers, chips and related components, it said.
Despite the rapid acceleration in output, inflation would remain well-controlled, it said.
The consumer price index is expected to rise 1.67 percent this year and 1.61 percent next year, helped by soft global oil prices and mild food inflation, the DGBAS said.
The agency also said it expects GDP growth to moderate to 3.54 percent next year, as global trade growth would slow to 2.3 percent from 3.6 percent this year.
Exports could reach US$664.4 billion next year, 6.32 percent higher than this year’s exceptionally high base, the DGBAS said, adding that Taiwan is well-positioned to outperform as AI adoption deepens, sovereign AI initiatives expand, global hardware demand remains solid and new advanced semiconductor capacity comes online.
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