Taipei:Taiwan's economy is expected to experience its fastest growth in 39 years in 2026, driven by robust domestic demand and exports, as projected by the Chung-Hua Institution for Economic Research (CIER).
According to Focus Taiwan, the think tank has increased its growth forecast to 12.16 percent for 2026, a significant rise from its previous estimate of 10.35 percent made in July. This growth rate would be the highest since the 12.75 percent recorded in 1987, based on government statistics.
The CIER analysis indicates that domestic demand is anticipated to contribute 55 percent to the overall growth, with net overseas demand accounting for the remaining 45 percent. A substantial part of this economic momentum is attributed to the strong demand for AI-related products, which has bolstered export growth, investment, and consumer spending.
CIER President Lien Hsien-ming highlighted that the upward revision of the growth forecast is largely due to expectations of increased domestic demand rather than exports. The expansion of capital expenditures by global cloud service providers is prompting local manufacturers to enhance capacity, leading to a projected 10.77 percent growth in private investment. Private consumption is forecasted to grow by 4.94 percent.
While the overall growth in 2026 is set to surpass the anticipated 8.76 percent growth in 2025, the quarterly growth rate is expected to decelerate towards the end of the year. The CIER estimates third-quarter growth of 12.73 percent, dropping to 8.20 percent in the fourth quarter due to a higher base of comparison.
Globally, economic activity is expected to moderate. S and P Global projects world economic growth to slow down to 2.41 percent in the current year from 2.90 percent in 2025, marking the slowest performance since the COVID-19 pandemic.
The CIER also noted potential challenges to Taiwan's high-growth trajectory, including monetary policy changes in major economies, financial market fluctuations, domestic investments, geopolitical risks, and cross-Taiwan Strait relations. Inflation is forecasted to be 2.06 percent annually, slightly higher than the previous estimate.
Looking ahead to 2027, the CIER revised its growth forecast upward to 5.97 percent from July's estimate of 3.71 percent, indicating continued expansion at a more moderate pace.
