Taiwan hikes 2026 economic growth forecast to 7.7% on AI demand
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People sell products at their stall at a market in New Taipei City, Taiwan January 31, 2024. REUTERS/Ann Wang
By Faith Hung and Jeanny Kao
TAIPEI, Feb 13 (Reuters) - Taiwan's tech-reliant economy is expected to grow faster than previously predicted in 2026, riding the wave of demand for artificial intelligence (AI) technology, the statistics office said on Friday, adding there could be further upward revisions.
Gross domestic product (GDP) is expected to expand by 7.71% this year, the Directorate General of Budget, Accounting and Statistics said, much better than the 3.54% pace it predicted in November.
Taiwan plays a pivotal role in the global AI supply chain for companies such as Nvidia and Apple. Its position is anchored by the world's largest maker of chips used in AI applications, Taiwan Semiconductor Manufacturing (TSMC).
The agency also revised fourth-quarter 2025 economic growth down slightly to 12.65%, compared with a preliminary reading of 12.68%, and revised full-year growth to 8.68% from an initially reported 8.63%, its fastest rate in 15 years.
There was a higher chance the forecast would be revised upwards rather than down, the statistics office said.
"Major Cloud Service Providers have significantly increased their AI-related capital expenditures, driving sustained strong demand for Taiwan's semiconductor and information and communication technology products," it said in a statement.
"The boom in AI has brought structural growth benefits to Taiwan's exports, which are both widespread and expected to be sustained," it added.
However, whether major U.S. cloud service providers would delay or cut capital expenditures is an uncertainty, as is any impact of geopolitical risks on the global economy, the statement said.
The strong growth of the economy reinforces the view that Taiwan's central bank will leave interest rates unchanged through June, said analyst Kevin Wang of Taishin Securities Investment Advisory.
The statistics agency sees 2026 exports surging 22.22% on year, compared with a previous forecast of 6.32%. It forecast the 2026 consumer price index at 1.68%, which would be below the central bank's 2% target but slightly higher than the 1.61% forecast issued previously.
(Reporting by Faith Hung and Jeanny Kao; Additional reporting by Emily Chan; Editing by Ben Blanchard, Muralikumar Anantharaman, Philippa Fletcher and Kim Coghill)
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