Taiwan raises 2024 economic growth forecast, Trump tariffs may crimp 2025
6:02 am Friday, November 29th, 2024
By Faith Hung and Jeanny Kao
TAIPEI (Reuters) -Taiwan’s trade-driven economy is expected to grow faster in 2024 than previously forecast thanks to the AI boom that has boosted demand for tech products, the statistics office said on Friday, but new U.S. tariffs could curb growth next year.
Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), the island is a key link in the global technology supply chain for companies such as Apple and Nvidia.
Gross domestic product (GDP) is now expected to expand by 4.27% this year, the Directorate General of Budget, Accounting and Statistics said, higher than the 3.9% forecast it released in August.
“The AI boom has kicked off exports of our electronics and telecommunication products. However, traditional goods exports are still soft due to over-capacity,” the statistics office said in a statement.
“China has taken loose monetary policy and fiscal policy to boost its economy, but its property market remains weak. That and escalating U.S.-China tensions have weighed and will continue to weigh on growth momentum,” the statement added.
For 2025, the statistics office now forecasts GDP to grow 3.29%, above the 3.26% previously predicted.
Some analysts said the forecast might be too optimistic, given threats of across the board import tariffs by U.S. President-elect Donald Trump, who takes office in January.
“Trump’s new policies will start having an impact next year, but our forecast is that the implementation will come sooner,” said Achilles Chen, an economic analyst at Cathay Financial.
However, statistics agency official Huang Yao-min said the island may only start to see the impact of any Trump tariffs from 2026.
The statistics agency sees 2025 exports growing 5.98% on year. It forecast the 2025 consumer price index at 1.93%, which would be slightly below the central bank’s 2% target but slightly higher than the 1.85% forecast for this year.
The agency also revised third quarter economic growth upwards to 4.17%, compared with a preliminary 3.97%.
For 2023, the economy grew 1.31%.
(Reporting by Faith Hung and Jeanny Kao; Additional reporting by Emily Chan; Editing by Jacqueline Wong, Ben Blanchard, Mark Heinrich and Kate Mayberry)
