Taipei: The Taiwan Institute of Economic Research (TIER) announced an upward revision of its forecast for Taiwan's GDP growth in 2026 to 7.56 percent, attributing this adjustment primarily to strong global demand for artificial intelligence, which is expected to drive significant increases in exports and investment.
According to Focus Taiwan, the revised projection marks an increase of 3.51 percentage points from TIER's earlier estimate in January. The new forecast aligns more closely with the Directorate General of Budget, Accounting and Statistics' expectation of a 7.71 percent growth in GDP for the same year.
TIER highlighted that the robust demand for AI applications is likely to enhance Taiwan's exports and industrial production. This trend is anticipated to lead to increased capital expenditure by semiconductor and ICT suppliers to meet the rising global demand. The think tank predicts that Taiwan's goods exports will grow by 27.11 percent in 2026, a significant jump from the previous estimate of 13.84 percent. Imports are also expected to rise by 21.22 percent, compared to an earlier forecast of 10.64 percent.
The forecast for the growth of exports of goods and services has been revised to 15.74 percent, up from the previous 7.22 percent estimate. Imports are projected to grow by 13.33 percent, an upgrade from the earlier prediction of 6.82 percent. Private investment growth is forecast to be 4.42 percent, an increase of 1.54 percentage points from the previous estimate, while fixed capital formation is expected to rise by 4.13 percent, compared to the earlier forecast of 3.05 percent.
In addition, TIER increased its forecast for private consumption growth to 2.60 percent, up from a prior estimate of 2.50 percent. TIER President Chang Chien-yi noted that despite disruptions caused by military conflicts in the Middle East, the think tank significantly raised its GDP forecast as AI development is expected to continue being a long-term driver of economic growth. Chang suggested that the conflict in the Middle East might be a short-lived event.
Gordon Sun, director of TIER's Economic Forecasting Center, highlighted the impact of AI on demand for chips, servers, electronic components, and related sectors, such as office and factory development, as manufacturers expand their investments. Sun emphasized that AI-driven exports and investments have become a significant positive factor for Taiwan's economy.
The think tank also pointed out that the ongoing conflict in the Middle East has led to an increase in global raw material prices, subsequently raising Taiwan's import costs and adding upward pressure on inflation. However, government price stabilization measures are expected to mitigate import-driven inflation. Sun stated that TIER has slightly increased its forecast for Taiwan's consumer price index growth by 0.23 percentage points to 1.89 percent, which remains below the central bank's 2 percent alert threshold.
Sun further recommended that, given inflationary pressures are more supply-side driven than demand-driven, the government should consider lowering commodity taxes and providing subsidies to alleviate pressure, rather than relying on interest rate hikes by the central bank.