PROJECTIONS:
It expects the economy to grow by
4 percent next year, if AI demand moderates, and headline inflation to edge up by 1.8 percent this year
By Chen Cheng-hui / Staff reporter
The Asian Development Bank (ADB) projected Taiwan’s economy would grow 7.6 percent this year, as surging demand for advanced semiconductors underpins the nation’s technology exports and investments despite higher energy prices amid the Middle East conflict.
The figure was up 3.6 percentage points from the ADB’s previous estimate in December last year, and marked the largest growth among advanced economies in Asia and the Pacific region, the bank’s Asian Development Outlook report released on April 10 showed.
The advanced economies in Asia and the Pacific comprise Taiwan, Hong Kong, Singapore, Japan, South Korea, Australia and New Zealand, the Manila-based bank said.
Photo: Ritchie B. Tongo, EPA
Singapore is projected to expand by 3 percent this year, followed by Hong Kong at 2.6 percent, Australia at 2 percent, South Korea and New Zealand at 1.9 percent, and Japan at 0.7 percent, the report showed.
“Despite geopolitical shocks this year, growth will likely remain tech-driven and robust, as the global artificial intelligence [AI] boom continues and domestic demand picks up,” the ADB said.
The Middle East conflict should not significantly dent global semiconductor sales, which are projected to grow 26 percent this year, the bank said, citing World Semiconductor Trade Statistics.
Meanwhile, uniform US tariffs of 10 to 15 percent on Taiwanese goods would position the economy more favorably than its major trading rivals, benefiting from its traditional, non-tech sectors and boosting overall exports, it said.
Improving consumer confidence, continued fiscal support for households and minimum wage increases would also help raise consumer spending, the bank said.
Healthy exports and consumption would support investment in plant and equipment, as well as the restocking of depleted inventories, it added.
The ADB’s projected growth for Taiwan this year aligned with the Directorate-General of Budget, Accounting and Statistics’ estimate of 7.71 percent, and the central bank’s forecast of 7.28 percent.
It projected the economy to grow 4 percent next year, assuming AI-related demand growth moderates.
“For the medium term and beyond, sustaining growth momentum hinges on resolving demographic constraints and strengthening non-tech productivity,” the ADB said.
Taiwan’s headline inflation is projected to edge up to 1.8 percent this year and to 1.5 percent next year, the bank said.
The ADB said its projections were made under the scenario of an early stabilization in the Middle East conflict.
A prolonged conflict would disrupt export production, raise inflation, and reduce consumer and business confidence, as the economy is almost wholly dependent on imported fuel, the bank added.