Taipei, April 26 (CNA) The Taiwan Institute of Economic Research (TIER) has revised upwards its forecast for Taiwan’s gross domestic product (GDP) growth in 2024, citing a worldwide artificial intelligence (AI) boom that is boosting Taiwan’s exports.
The TIER, a leading economic think tank in Taiwan, said Thursday that it was projecting 3.29 percent GDP growth in 2024, up 0.14 percentage points from a 3.15 percent growth estimate made in January.
Despite the upward revision, the TIER appeared more cautious than the government after the Directorate General of Budget, Accounting and Statistics raised its forecast for Taiwan’s GDP growth to 3.43 percent in late February.
According to the TIER, Taiwan’s economy is expected to grow 5.88 percent in the first quarter, 4.53 percent in the second quarter, 2.11 percent in the third quarter and 1.02 percent in the fourth quarter.
The think tank said two factors driving exports were behind its higher projection — emerging technologies, in particular AI applications, pushing up global demand for high-end microchips and foreign buyers starting to rebuild their inventories.
Under such circumstances, the TIER said, it raised its forecast for Taiwan’s export growth in 2024 by 0.70 percentage points to 7.55 percent, while its forecast for Taiwan’s import growth was increased by 0.10 percentage points to 6.44 percent.
Speaking with reporters, TIER Economic Forecasting Center Director Gordon Sun (孫明德) said the United States economy remained resilient despite high interest rates, and solid demand from that market was expected to push up exports from Taiwan.
Sun said Taiwan, in particular, has benefited from the rising popularity of AI applications, which has strengthened demand for the country’s high-end chips.
Echoing Sun, TIER President Chang Chien-yi (張建一) said the local tech sector is expected to be the biggest beneficiary of the current AI frenzy, while non-tech companies will likely lag behind in terms of global demand for their products.
Chang said AI enthusiasm should not only benefit contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest supplier of AI chips, but also other tech companies on a B2C basis from B2B and lend additional support to the local economy.
As for domestic demand, the TIER cut its forecast for private investment growth sharply by 2.13 percentage points to 1.11 percent.
Sun said geopolitical tensions and trade tensions between the US and China have led many companies in Taiwan to take a cautious approach to expanding their capacity.
In addition, Sun said, the weakness of China’s economy has prompted many Taiwanese companies, in particular in the old economy sector, to scale back their investments.
The TIER also downgraded its forecast for Taiwan’s fixed capital formation growth to 2.51 percent, down from its forecast of 4.70 percent growth in January.
The think tank left its forecast for Taiwan’s private consumption growth in 2024 unchanged at 2.69 percent.
Strong domestic spending should continue to support the country’s economic growth, but the relatively high base of comparison set last year will cap the growth, the TIER said.
Looking ahead, the TIER cautioned that the global economy was facing uncertainties, such as political tensions in the Middle East, a possible tightening of monetary policies by major central banks and weak demand from China, that could affect Taiwan’s exports and investments.
(By Pan Tzu-yu and Frances Huang)
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