AI boom predicted to drive Taiwan's economy to grow fastest in four decades

TAIPEI — Taiwan expects its tech-reliant economy to grow at the fastest pace in nearly four decades this year, the statistics agency said on Friday, upgrading its forecast due to strong AI demand.

The agency said gross domestic product growth is now forecast at 11.05 per cent for the year, the fastest expansion since 12.75 per cent was recorded in 1987, and revising upward the 9.64 per cent forecast it issued in May.

"Economic growth is robust, and AI development is very important for Taiwan. We need to monitor it closely," statistics minister Chen Shu-tzu told reporters.

The statistics agency expects 2026 exports to rise 41.07 per cent from a year earlier, marking its fastest growth since 1976. It previously forecast a 39.77 per cent expansion in May.

Taiwan plays a leading role in fulfilling the demand for AI chips and technology from tech giants such as Nvidia and Apple, with the island home to the world's largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Co.

Strong demand for AI helped Taiwan's economy expand 8.76 per cent in 2025.

The agency also revised up a notch its second-quarter 2026 economic growth view to 12.93 per cent, versus a preliminary reading of 12.92 per cent.

Giving its first forecast for next year, it said it expected Taiwan's economy to grow 6.04 per cent in 2027.

It also expects the 2026 consumer price index to be at 2.07 per cent, which is slightly above both the central bank's two per cent target and the 1.93 per cent forecast issued previously.

The strong economic growth and the inflation forecast have reinforced the view that Taiwan's central bank will not move on interest rates, analysts said.

"The central bank is expected to hold its policy rate steady through the end of the year," said analyst Elvis Lu of President Capital Management Corp.

The central bank is scheduled to hold its next quarterly rate-setting meeting on Sept 17.

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