Taiwan’s Directorate-General of Budget, Accounting and Statistics (DGBAS) on Friday raised its forecast for economic growth in 2024 and 2025, projecting expansion of 4.27% and 3.29%, respectively, Bloomberg reports.
This upward revision, to 3.29% from the previous estimate of 3.26% for 2025, comes despite looming trade uncertainties surrounding the return of Donald Trump to the US political scene.
Trump’s recent threat of additional tariffs on Chinese goods has cast a shadow over Taiwan’s economic outlook. The island nation relies heavily on both the US and China as major trading partners, making it particularly vulnerable to escalating trade tensions. Moody’s Analytics warned that renewed US-China trade friction would significantly impact Japan, South Korea, and Taiwan, with Taiwan potentially suffering the most due to its extensive trade relationships with both countries. However, Moody’s also noted that these economies might face relatively modest levies compared to other nations due to their substantial investments in the US.
Despite these risks, Taiwan’s economy has performed exceptionally well this year, fueled by robust global demand for its high-tech products. The island’s semiconductor industry, a crucial component of the global AI sector, is benefiting from increased orders from major players like Nvidia, Microsoft, and OpenAI.
This strong performance has enabled the Central Bank of the Republic of China (Taiwan) to maintain its benchmark interest rate at a 16-year high, implement reserve requirement increases for banks, and introduce measures to curb the overheating property market. UBS Investment Bank anticipates the central bank will hold rates steady in 2025, prioritizing financial stability. The next rate decision is scheduled for December 19.
