Taipei: Taiwan's gross domestic product (GDP) is forecast to grow 2.90 percent in 2025, with the adverse impacts of the Trump administration's "reciprocal" tariffs expected to become more apparent in the second half of the year, according to the Taiwan Research Institute (TRI). According to Focus Taiwan, the TRI, a leading economic think tank in Taiwan, indicated that local economic growth is expected to slow down in the latter half of the year. This slowdown is attributed to rush orders diminishing as foreign buyers, initially keen to avoid tariffs, might reconsider once the United States' tariff policies become clearer. U.S. President Donald Trump announced reciprocal tariffs on April 2, targeting countries with high trade surpluses with the United States. This included a 32 percent import duty on goods from Taiwan, although a 90-day pause was announced a week later to allow for negotiation of a lower levy. The TRI's forecast is more cautious compared to the government's projection. The Directorate Gener al of Budget, Accounting and Statistics (DGBAS) predicted in late May that Taiwan's GDP will grow 3.10 percent. Both TRI and DGBAS agree that Taiwan will experience a much stronger first half, with GDP growth likely to hit 5.35 percent, but expect significant deceleration to 1.00 percent in the second half of the year. After a 5.34 percent growth in the first quarter, the TRI anticipates Taiwan's economy will grow 4.95 percent in the second quarter. However, a sharp slowdown is expected, with growth rates of only 0.78 percent in the third quarter and 0.84 percent in the fourth quarter. TRI President Wu Tsai-yi highlighted the challenges Taiwan will face in the second half of the year, particularly a decline in orders. Wu remains cautious about the local economy, awaiting the outcome of tariff discussions with the U.S. and monitoring the evolving tensions between Washington and Beijing, as well as potential adjustments in global monetary policies. According to the TRI, Taiwan's exports in merchandise and se rvices are projected to grow 9.82 percent in 2025, driven by strong global demand for emerging technologies, including artificial intelligence applications and high-performance computing devices. The TRI noted that strong global demand for tech gadgets has prompted local manufacturers to increase production capacity, with private investment expected to grow 4.54 percent in 2025. Capital formation, encompassing both private and public investment, is forecast to grow 4.57 percent. The TRI also pointed out that uncertainties in the global economy have impacted the local stock market and consumer sentiment, resulting in an estimated growth of only 1.50 percent in private consumption in Taiwan. Echoing Wu, TRI founder Liu Tai-ying mentioned the unpredictability of the Trump administration, adding more uncertainty to the global economy. The weakness of the U.S. dollar has strengthened the Taiwan dollar, with anticipated foreign exchange losses exerting pressure on Taiwan's exporters and insurance companies holdi ng large foreign assets. The TRI forecasts the exchange rate of the Taiwan dollar to the U.S. dollar will average NT$30.69 in 2025, compared to NT$32.11 in 2024. Additionally, the think tank projects the local consumer price index will grow 1.98 percent in 2025, remaining below the 2 percent alert level set by the central bank.