Taiwan: Strong Double-Digit GDP Expansion to Persist — DBS

DBS Group Research economist Ma Tieying has raised Taiwan's 2026 GDP growth forecast to 11.6% from a previous 9.4%, while lifting the 2027 forecast to 5.6% from 4.5%. Under this projection, Taiwan's economic growth will remain at double-digit levels for consecutive years, marking the strongest growth in more than three decades.

**Upgrade Rationale: AI-Driven Expansion Momentum Stronger Than Expected**

DBS noted that Taiwan's economy, propelled by AI-related industries, is at the peak of a robust expansion cycle. The bank had previously projected 2026 GDP growth of 9.4%, ranking among the top in the region, but the latest assessment indicates actual momentum is stronger than initially judged, prompting a further upward revision. Market sources indicate that Taiwan's critical position in the global high-tech industry division of labor has enabled it to gain significant traction in the current AI capital expenditure cycle.

**Inflation and Policy Environment Remain Key Watch Points**

DBS previously projected Taiwan's consumer price index annual growth rate to edge up to 2.0% from 1.9%, with inflation rising to around 2% from May and holding through year-end. Against the backdrop of growth significantly exceeding expectations, price trends and monetary policy space will be key points to monitor going forward. However, no latest update on DBS's stance regarding Taiwan's interest rate path has been seen in publicly available information.

**Risks Lie in High Base Effects and External Demand Volatility**

Despite the substantial upward revision to growth forecasts, the 2027 projection still falls notably to 5.6%, reflecting high base effects and external demand uncertainty. DBS's optimistic view for 2026 is primarily built on continued expansion in AI-related exports and investment; should the pace of global technology capital expenditure shift, actual growth could still deviate from the current forecast trajectory.