Taipei, Taiwan – The Taiwan Institute of Economic Research (TIER) has revised its 2024 GDP growth forecast for Taiwan, raising it to 4.03% from an earlier estimate of 3.85%. The updated forecast comes amid a robust economic outlook, driven by growing domestic demand and an uptick in exports, particularly those tied to artificial intelligence (AI) applications.
The positive forecast reflects Taiwan’s resilience in the face of global challenges, but it also acknowledges the potential risks posed by global geopolitical tensions and trade dynamics. In particular, TIER raised concerns about the possible impact of U.S. President-elect Donald Trump’s return to the White House, which could lead to further uncertainties in the global economy and disrupt Taiwan’s export growth.
TIER’s Revised Economic Forecast for 2024 and 2025
TIER’s latest forecast represents a more optimistic view of Taiwan’s economic performance, driven largely by international demand for AI-related products and a strong private-sector investment that supports domestic consumption. According to TIER’s Economic Forecasting Center Director, Gordon Sun, Taiwan’s export sector has experienced renewed growth in the third quarter of 2024, despite slow performance in traditional industries.
| Indicator | 2024 Forecast | 2025 Forecast |
|---|---|---|
| GDP Growth | 4.03% | 3.15% |
| Inflation Rate (CPI) | 1.87% | 1.87% |
| Key Driver | Exports (AI-driven) | Domestic investment and consumption |
| Risks | Geopolitical tensions, U.S.-China trade relations | Climate change, labor shortages, rising utility costs |
Key Factors Driving Taiwan’s Economic Growth
1. Surge in Exports
Taiwan’s export sector has benefitted from global demand for artificial intelligence technologies. As AI applications, semiconductor advancements, and related technology products gain traction worldwide, Taiwan has become a critical player in the global supply chain. This growth in exports is expected to contribute significantly to the country’s GDP expansion in 2024, lifting Taiwan’s economy despite challenges from traditional industries.
2. Domestic Demand and Investment
In addition to the strong export performance, domestic consumption and private-sector investment remain robust, adding a layer of stability to Taiwan’s economic growth. The private sector, buoyed by strong consumer confidence and investments in technology, continues to fuel the nation’s economic activity.
3. Moderate Inflation Projections for 2025
Inflationary pressures in Taiwan are expected to moderate in 2025, with the consumer price index (CPI) forecasted to grow by 1.87%. This represents a slowdown in inflation compared to previous years, as the economic conditions stabilize and external inflationary factors ease. However, TIER highlighted that global challenges, including climate change, labor shortages, and rising utility rates, will continue to exert pressure on prices.
Risks and Uncertainties: Geopolitical Tensions and Trade Conflicts
While the revised GDP forecast for 2024 remains positive, Gordon Sun warned of the uncertainties that could arise from geopolitical tensions, particularly with the potential return of Donald Trump to the White House. If the U.S.-China trade war escalates or new trade barriers are imposed, Taiwan could face disruptions to its export sector, which is crucial to its economic growth.
Moreover, as global supply chains continue to evolve in response to political and environmental pressures, Taiwan’s dependence on international trade means that trade wars, tariffs, and supply chain disruptions could have significant economic consequences.
TIER’s Call for Preparation: Strategic Actions Needed
With potential risks on the horizon, TIER President Chang Chien-yi emphasized the need for Taiwan to make full preparations in case of an escalation of the trade war. Taiwan’s government and businesses need to focus on strategies to mitigate the impact of external disruptions, strengthen domestic resilience, and continue to position Taiwan as a leading hub for technological innovation.
FAQs About Taiwan’s Economic Outlook and 2024 GDP Forecast
1. What is TIER’s updated GDP growth forecast for Taiwan in 2024?
TIER has revised its GDP growth forecast for Taiwan to 4.03% for 2024, citing strong export growth driven by AI technologies and continued domestic demand.
2. Why is Taiwan’s GDP forecast raised for 2024?
The forecast was raised due to increasing global demand for AI applications, which have led to a recovery in Taiwan’s export sector, as well as strong private-sector investment and domestic consumption.
3. What are the risks to Taiwan’s economic growth?
Key risks include geopolitical tensions, particularly the potential impact of U.S. President-elect Donald Trump’s return and the possibility of escalated U.S.-China trade tensions. Additionally, issues like climate change, labor shortages, and rising utility rates could affect Taiwan’s economy.
4. What is Taiwan’s inflation outlook for 2025?
TIER forecasts Taiwan’s inflation rate (CPI) to be 1.87% in 2025, signaling a moderation in inflationary pressures compared to previous years.
5. How does Taiwan’s economic growth compare to global trends?
Taiwan is experiencing moderate growth relative to global standards, with its technology sector, especially in AI and semiconductors, performing strongly despite global economic uncertainties.
Economic Resilience Amid Global Challenges
Taiwan’s economy has shown remarkable resilience in 2024, driven by a combination of export growth, particularly in cutting-edge AI technologies, and stable domestic demand. As Taiwan looks ahead to 2025, the outlook remains positive, though careful attention must be paid to global political and economic developments that could pose risks to its economic stability.
By focusing on technological advancements and ensuring domestic economic resilience, Taiwan is poised to continue its role as a global leader in the semiconductor and AI industries, even amid external challenges.
