Taiwan's Economic Outlook Improves as Chung-Hua Institution Raises 2024 GDP Growth Forecast

Taiwan's GDP growth forecast raised to 3.38% in 2023, driven by strong export demand for AI-related products, but high inflation and global uncertainties pose risks to the economy.

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Rafia Tasleem
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Taiwan's Economic Outlook Improves as Chung-Hua Institution Raises 2023 GDP Growth Forecast

Taiwan's Economic Outlook Improves as Chung-Hua Institution Raises 2024 GDP Growth Forecast

The Chung-Hua Institution for Economic Research (CIER) has raised its forecast for Taiwan's 2024 GDP growth to 3.38%, up from its previous estimate of 3.10%. The upward adjustment is attributed to optimism about the country's export growth, driven by a projected 5.08% increase in global trade in goods and a boom in demand for artificial intelligence applications.

CIER expects Taiwan's exports to grow by 5.26% in 2024, up from a previous forecast of 4.46%, due to strong demand for AI-related products. The institution believes that Taiwan's exports will continue to grow, supported by the ongoing global trade recovery and robust demand for AI-related products and services.

However, CIER also warned of risks from high inflation and global economic uncertainties that could impact Taiwan's economic performance. The institution expects private consumption growth to remain at 2.09% in 2024 and private investment to fall by 0.2% due to these factors, as well as the Central Bank's interest rate hike.

Why this matters: Taiwan's economic outlook has significant implications for the global technology industry, as the country is a major supplier of semiconductors and other high-tech components. The improved GDP growth forecast, driven by strong demand for AI-related products, highlights the increasing importance of artificial intelligence in shaping the global economy.

Despite the positive GDP outlook, CIER cautioned that inflationary pressure, uncertainties in major economies' monetary policies, China's economic growth, and cross-strait relations could still impact Taiwan's economic development. The institution expects Taiwan's consumer price index (CPI) to grow 2.30% in 2024, which is above the 2% alert set by the central bank, indicating that inflationary pressure will remain a concern.

Key Takeaways

  • CIER raises Taiwan's 2024 GDP growth forecast to 3.38% from 3.10%.
  • Exports expected to grow 5.26% in 2024 due to strong AI-related demand.
  • Risks from high inflation and global economic uncertainties could impact Taiwan.
  • Taiwan's economic outlook crucial for global tech industry as major semiconductor supplier.
  • Inflationary pressure remains a concern, with CPI expected to grow 2.30% in 2024.