DBS Group Research economist Ma Tieying notes Taiwan\u2019s 2Q GDP growth slowed to 12.9% year-on-year from 14.5% in 1Q, but remained solid on a quarterly basis. The report highlights narrowing divergence between exports and domestic demand, upside risks to 2026\u20132027 growth forecasts, expectations for a central bank rate hike, and ongoing pressures in Taiwan\u2019s equities, currency and bond markets.<\/p>\n
GDP, rates and market pressures<\/p>\n
“According to the preliminary estimate, GDP growth slowed to 12.9% yoy in 2Q, from the 1Q peak of 14.5%. On a QoQ saar basis, growth remained solid at 9.9%, compared with 6.9% in 1Q.”<\/p>\n
“As a result, net exports contributed 5.8ppt to headline GDP growth, while domestic demand contributed 7.1ppt. This marked the first time in five quarters that domestic demand made a larger contribution than net exports.”<\/p>\n
“We see some upside risks to our 2026 and 2027 GDP growth forecasts of 9.4% and 4.5%, respectively, although we are maintaining them for now. We continue to expect AI-driven super growth to transition toward a more normalized pace from 2H26 through 2027.”<\/p>\n
“The GDP<\/a> data, both in terms of growth momentum and composition, should provide sufficient confidence for the central bank to hike rates in 2H26. CPI inflation is expected to remain in the 2-2.5% yoy range through 2H26, driven by a rebound in oil prices amid renewed Middle East tensions and volatile food prices under El Ni\u00f1o conditions. We continue to expect a 12.5bp rate hike in 4Q, bringing the policy discount rate to 2.125%.”<\/p>\n “In financial markets, pressures from the stock<\/a> market correction, capital outflows, and tighter liquidity conditions remain. The TAIEX has declined 10% from its late-June peak, driven by the global semiconductor stock sell-off and, in particular, heightened volatility in the KOSPI. Foreign net selling of the TAIEX reached USD23bn in July.”<\/p>\n