Taiwan's GDP growth forecast at 10.35% for 2026 amid strong domestic and international demand

Taiwan's economy is poised for robust growth in 2026, with the Chung-Hua Institution for Economic Research (CIER) forecasting a 10.35% expansion. This optimistic outlook, described as "internally and externally hot," is fueled by sustained demand for artificial intelligence and strong export performance. The CIER anticipates that AI-related investments and product exports will significantly contribute to the island's economic momentum.

Despite the strong overall forecast, the pace of growth is expected to gradually slow down through the year due to base effects. The CIER projects that the first quarter will see a 14.55% increase, followed by 10.96% in the second quarter. Growth is then forecast to moderate to 10.63% in the third quarter and 6.04% in the fourth, resulting in a stronger first half (12.71%) compared to the second (8.24%). This pattern reflects the high growth rates experienced in the previous year.

Internally, strong corporate profits and a booming stock market are expected to boost consumer spending through wealth effects and increased transaction taxes. The CIER estimates that domestic demand will contribute approximately 4.73 percentage points to the overall GDP growth, while net foreign demand will add 5.62 percentage points. This balanced growth model highlights both strong domestic consumption and significant contributions from international trade.

However, inflationary pressures remain a key concern. The CIER points to the impact of international energy prices, geopolitical tensions, and global supply chain costs. Despite these challenges, the Taiwanese government's ongoing efforts to stabilize prices are expected to mitigate the impact on household living costs. The CIER forecasts Taiwan's annual CPI growth rate for 2026 to be around 2.02%, slightly above the 2.0% target.