Taiwan: AI-driven growth and inflation outlook – DBS

DBS Group Research economist Ma Tieying assesses Taiwan’s macro outlook, highlighting a strong AI cycle, diversified energy imports and evolving tariff dynamics with the US. The report projects GDP growth easing from around 12% year-on-year to high-single digits from 4Q26, with full-year forecasts of 11.6% for 2026 and 5.6% for 2027, and CPI near 2.5% in 4Q26.

AI cycle, growth and prices

"GDP growth remains broadly on track with our expectations. High-frequency indicators suggest that GDP growth should remain around 12% yoy in 3Q, broadly in line with 12.9% in 2Q but below the 15.4% peak in 1Q. Growth is expected to moderate to a high-single-digit pace from 4Q onwards."

"We maintain our full-year GDP growth forecasts at 11.6% for 2026 and 5.6% for 2027."

"We maintain our forecast for headline CPI inflation to remain close to 2.5% in 4Q, and retain our full-year forecasts at 2.0% for 2026 and 2.1% for 2027."

"CPI inflation is also tracking broadly in line with our forecast. Headline CPI remained elevated at 2.4% yoy in 3Q, up from 1.2% in 1Q and 2.2% in 2Q."

"Taiwan has navigated the complex global environment relatively well so far this year, supported by robust AI exports and investment, diversified energy imports, and efforts to absorb higher upstream energy costs. Some normalisation is likely in 4Q26–2027, as the AI-driven growth boost moderates and domestic energy prices face greater pressure to adjust."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)