In a recent interview, Dr. Lian Hsien-Ming, the director of the Chung-Hua Institution for Economic Research, shared valuable insights on Taiwan’s economic outlook. He noted that the combination of robust domestic demand and strong export performance has led to an upward revision of the projected economic growth for this year, now estimated at 3.96%, up from the previous forecast of 3.81% made in July. This reflects a positive adjustment of 0.15 percentage points.
Dr. Lian explained that Taiwan’s economy has outperformed initial expectations, significantly benefiting from advancements in artificial intelligence (AI) that have positively impacted various industries. He emphasized that not only is Taiwan’s export sector thriving thanks to strong global demand driven by AI, but domestic consumption is also on the rise, supported by a buoyant stock market and the continued wealth effect stimulating private sector spending. Moreover, with inventory levels nearing normalization, there is renewed business investment enthusiasm, laying a solid foundation for economic growth.
Looking ahead to 2025, Dr. Lian indicated that despite a slower growth forecast of approximately 3.03%, which is a natural progression after this year’s growth, Taiwan is expected to remain above the 3% growth threshold. The moderation in growth can be attributed to a higher base compared to last year and anticipated easing in the pace of AI expansion.
On the subject of inflation, he highlighted challenges posed by recent typhoons that have driven up domestic fruit and vegetable prices. The institution estimates that the Consumer Price Index (CPI) for this year will see a year-on-year increase of 2.17%, surpassing the 2% mark for the third consecutive year but down from 2.49% last year. For 2025, the CPI is projected to rise to 1.96%, remaining close to the 2% threshold, largely due to expected increases in electricity prices and service-related inflation.
When asked about the potential impact of the upcoming U.S. presidential election on Taiwan’s economic development next year, Dr. Lian acknowledged that changes stemming from the election will likely pose global economic challenges, including implications for Taiwan. He pointed out that shifts in U.S. interest rate and industrial policies will have to be closely monitored. However, he remains optimistic that Taiwan’s momentum in the semiconductor and AI sectors will cushion any potential fallout, suggesting that the impact of the election outcome may be less significant than anticipated.
Additionally, the Taiwan Institute of Economic Research recently revealed that its September economic trends survey indicated a downturn across manufacturing, service, and construction sectors. This decline, which marks the fourth consecutive month of downturn in manufacturing, is attributed to a sluggish recovery in global manufacturing, the end of the summer consumption peak, and government measures to curb housing speculation.
Dr. Lian concluded by noting that while global manufacturing recovery remains weak, the expected interest rate cuts from central banks in the U.S. and Europe could help rejuvenate consumer and investment momentum. He also mentioned that recent economic support measures introduced by China might bolster financial market confidence in the short term, although the effectiveness of these stimuli will require careful observation.
