Taipei: The Chung-Hua Institution for Economic Research (CIER) announced on Friday an upward revision of Taiwan's 2026 economic growth forecast to 7.22 percent. This adjustment is attributed to the robust demand for artificial intelligence (AI) despite disturbances arising from conflicts in the Middle East.
According to Focus Taiwan, this latest forecast marks a significant increase from CIER's January projection of 4.14 percent. Additionally, the institution has adjusted its projection for 2027, predicting a growth of 3.4 percent, up from the previous forecast of 2.95 percent.
CIER has also revised its 2026 consumer price index (CPI) growth projection to 1.98 percent, with a 1.83 percent forecast for 2027. This adjustment reflects inflationary pressures stemming from geopolitical tensions in the Middle East, with the 2026 figure nearing the 2 percent inflation warning threshold.
CIER President Lien Hsien-ming highlighted that Taiwan's exports are thriving, particularly in AI-related products, with first-quarter economic growth anticipated to surpass 13 percent. The institution described Taiwan's economic outlook as "externally hot, internally moderate."
Regarding international demand, CIER noted that while conflicts in the Middle East have impacted commodity trade and transportation, the AI sector continues to experience expansion. The exports and imports of information and communications technology, as well as electronic and semiconductor products, are expected to grow steadily, with export growth projected at 19.83 percent and import growth at 18.24 percent.
On the domestic front, private consumption is expected to increase by 2.16 percent this year. This growth is supported by an improving labor market and wealth effects driven by the stock market, surpassing last year's figures, CIER stated.
Lien emphasized that the forecasts are based on assumptions by international institutions, including the anticipation that the Middle East conflict will not be prolonged and that global oil prices will peak in April. However, he cautioned that the ongoing conflict could impact energy and supply chains, potentially affecting interest rates, adding complexity to economic forecasting.
The duration of the conflict, domestic energy price caps, and the level of government intervention will be pivotal factors in shaping inflation trends, Lien concluded.