Taipei: The Taiwan Research Institute (TRI), one of the leading economic think tanks in the country, has raised its forecast of Taiwan's gross domestic product (GDP) growth to 9.33 percent for 2026, citing robust global demand for AI applications.
According to Focus Taiwan, the TRI's new forecast represents a significant upgrade from the previous estimate of 3.46 percent that the institution made at the end of last year. This update comes as the local semiconductor and ICT industries are poised to receive a substantial boost from AI development.
The revised 9.33 percent growth forecast aligns closely with a similar optimistic projection by the Directorate General of Budget, Accounting and Statistics (DGBAS), which raised its prediction to 9.64 percent in May. This was a notable increase from the 7.71 percent forecast made in February.
Despite global economic challenges, including military conflicts in the Middle East that have driven up crude prices and inflationary pressures, the TRI notes that strong demand for AI applications, high-performance computing, and cloud-based data centers has mitigated the geopolitical impacts.
The TRI anticipates that AI-related applications will continue to support Taiwan's exports, projecting merchandise and service exports to grow by 19.62 percent in 2026, compared with the previous estimate of 4.72 percent.
Additionally, imports of merchandise and services are expected to grow at 16.34 percent, an increase from an earlier forecast of 3.75 percent, according to the TRI.
With global demand for tech gadgets encouraging semiconductor firms, AI server makers, and related manufacturers to expand production, Taiwan's private investments are expected to grow by 6.16 percent in 2026, up from the previous estimate of 1.70 percent.
Taiwan's fixed capital formation, encompassing both public and private investment, is projected to grow by 5.53 percent in 2026, compared with an earlier forecast of 2.10 percent, the TRI stated.
The TRI emphasizes that Taiwan is likely to rely on exports to drive up investments and income, which will subsequently boost consumption. In 2026, Taiwan's private consumption is expected to grow by 3.51 percent, an increase from the previous forecast of 2.23 percent.
However, the TRI cautions that Taiwan's economy remains heavily concentrated in the semiconductor and ICT industries. If the high-tech sector encounters challenges, the impact on the local economy could be more significant than anticipated.
The institution advises that Taiwan should implement measures to ensure balanced growth across its industrial sector and enhance domestic demand, ultimately improving its competitive edge and fostering long-term growth.
In remarks on the thriving stock market, TRI founder Liu Tai-ying expressed confidence in Taiwan's economic fundamentals and optimism about share prices. Liu highlighted that a peace agreement announced by the United States and Iran this week has contributed to stabilizing international crude oil prices and reducing inflationary pressures.
He further noted that if inflation concerns continue to ease, the U.S. Federal Reserve might consider cutting interest rates, which could bolster global markets, including Taiwan's.