Taipei: Strong global demand for artificial intelligence (AI) technology has prompted the Taiwan Institute of Economic Research (TIER) to nearly double its forecast for Taiwan’s 2025 economic growth rate to 5.94 percent.
According to Focus Taiwan, during a seminar in Taipei, TIER announced it had raised its projection from 3.02 percent in July to 5.94 percent. This significant upgrade is attributed to robust American demand for AI technologies, which has enhanced Taiwan’s exports and investment.
Figures from the Directorate General of Budget, Accounting and Statistics (DGBAS) last month indicated that third-quarter goods exports reached US$169.4 billion, exceeding previous estimates by US$9.16 billion.
TIER President Chang Chien-yi stated that the forecast was made conservatively due to existing uncertainties. He added that with the government’s NT$10,000 (US$323.4) cash handouts, growth could potentially reach 6 percent.
TIER also revised its forecasts for export and real private investment growth to 24.98 percent and 10.97 percent, respectively, as semiconductor manufacturers ramp up advanced manufacturing and high-end packaging operations to meet increasing global demand.
However, TIER expects both the economic growth rate and export growth to decrease significantly to 2.60 percent and 3.08 percent, respectively, in 2026, due to the high base effect on electronics and information and communications products.
Sun Ming-te, director of TIER’s Macroeconomic Forecasting Center, expressed concerns about a potential AI bubble, noting that cross-investment among several tech giants has not yet resulted in major breakthroughs.
In response to questions about Taiwan’s ongoing tariff negotiations with Washington, Chang predicted that the final rates would be set at 15 percent, aligning with those applied to Japanese and South Korean goods.
The White House announced in early August a provisional 20 percent tariff rate on Taiwanese goods, while Japan and South Korea face a 15 percent levy. However, the 20 percent tariff on Taiwanese exports must be added to the products’ original Most-Favored-Nation (MFN) rates and any applicable anti-dumping or countervailing duties, disadvantaging some Taiwanese companies.
Although U.S. President Donald Trump’s tariffs could still be overturned by the Supreme Court, Chang cautioned that Taiwan “cannot be complacent,” suggesting that Trump would “definitely come up with other tricks.”
Meanwhile, TIER forecast Taiwan’s consumer price index (CPI) growth to slow to 1.70 percent in 2025, ending a three-year period of the index remaining above 2 percent. The CPI is projected to decrease further to 1.66 percent in 2026.