Taiwan's Economy Set to Outpace Growth Projections Owing to AI Boom

Taiwan's economy is poised for stronger-than-expected growth in 2024, fueled by a boom in demand for technology products driven by advancements in artificial intelligence. The Directorate General of Budget, Accounting, and Statistics has revised the gross domestic product (GDP) growth forecast to 4.27%, up from the 3.9% predicted in August. This marks a sharp rebound from the modest 1.31% growth recorded in 2023, signaling a revitalized economic trajectory.

The island, which hosts Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world’s largest contract chipmaker, continues to play a critical role in the global tech supply chain. Companies like Apple and Nvidia depend on Taiwan for high-tech components, and the ongoing AI surge has bolstered export demand, driving growth in the technology sector.

Exports are now projected to grow by 5.98% in 2025, reflecting steady demand for Taiwan’s products. While this is a slight slowdown compared to the earlier forecast of 8.71% for 2024, it underscores the enduring strength of Taiwan’s trade-oriented economy. The island remains a vital hub for cutting-edge semiconductor and AI-related manufacturing.

Inflation is expected to remain under control, with the consumer price index (CPI) forecast at 1.93% in 2025, slightly below the central bank’s target of 2%. This marks a slight increase from the 1.85% forecast for 2023, indicating stable price levels as Taiwan's economy expands.

In addition, the statistics office revised the third-quarter economic growth figure for 2024 upward to 4.17% from an initial estimate of 3.97%. This adjustment reflects the island’s accelerating economic activity, driven by its strategic position in the global technology supply chain and the growing AI-related demand.