Taiwan’s Economy to Grow 3.16% in 2025, Driven by AI and Semiconductor Exports, Think Tank Predicts

Taiwan’s Economic Outlook for 2025: Growth Driven by AI and Semiconductor Exports

The Taiwan Research Institute (TRI) has forecasted Taiwan’s economy to grow by 3.16% in 2025, with artificial intelligence (AI) technologies and semiconductor exports serving as the key drivers of growth. The think tank’s prediction reflects strong demand for AI-related products, as well as Taiwan’s continued leadership in the semiconductor industry, which is set to play a pivotal role in the global economy.

AI Market Boosts Economic Growth

TRI’s founder, Liu Tai-ying (劉泰英), highlighted that the growing AI market will be a major contributor to Taiwan’s economic performance, specifically boosting exports. The TRI’s report projects that real growth in goods and services exports will reach 5.95% in 2025, driven largely by Taiwan’s semiconductor chips, which are at the core of many AI applications.

“AI will drive the future economy, and Taiwan’s chips are essential to that future,” Liu said during a press briefing, underlining Taiwan’s critical role in the global AI supply chain.

Inflation Forecast and Economic Challenges

Alongside the positive growth forecast, TRI also predicts inflation will remain under control. The Consumer Price Index (CPI) for Taiwan is expected to increase by just 1.99% in 2025, falling below the 2% inflation threshold. This marks a positive shift in Taiwan’s inflationary outlook following recent years of higher price pressures.

However, Liu also acknowledged that Taiwan’s economy may face external challenges that could potentially disrupt its growth trajectory. Key risks include the possibility of renewed tariffs under U.S. President-elect Donald Trump, the ongoing Russia-Ukraine conflict, and escalating tensions in the Middle East. These uncertainties could create volatility in the global market, potentially affecting Taiwan’s export-oriented economy.

Resilience Amid Global Uncertainty

Despite these external challenges, Liu expressed confidence in Taiwan’s long-term economic prospects. The semiconductor industry, a strategic asset for Taiwan, is expected to remain a cornerstone of the nation’s economic growth. The global demand for increasingly advanced chips—critical not only for AI but also for military applications—provides Taiwan with a significant economic advantage.

“Taiwan’s semiconductor industry is not just an economic asset but a strategic one,” Liu said. The demand for high-tech chips, especially in the context of geopolitical tensions, is expected to increase, further boosting Taiwan’s economic standing in the global market.

2024 Economic Growth Update

In addition to the 2025 forecast, the Taiwan Research Institute also updated its forecast for Taiwan’s economic growth in 2024. TRI now expects Taiwan’s economy to expand by 4.21%, an upward revision of 0.64 percentage points from the previous forecast. This revision is largely attributed to the AI boom, which has already had a positive impact on Taiwan’s export sector and overall economic performance this year.

Economic Outlook Summary

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