Taiwan posts fastest quarterly GDP growth since 1987 on AI demand

Taiwan recorded its fastest quarterly economic growth since 1987, fueled by high demand for essential AI development technologies. This news was made public following the leak of a report from the statistics bureau’s headquarters in Taipei City, dated Friday, January 30.

The report highlighted that the country’s gross domestic product (GDP) increased by 12.68% in the fourth quarter. After the news was made public, a reliable source conducted a survey of economists and discovered that this new figure greatly exceeded the median prediction of 8.75%.

Interestingly, reports highlighted that last year’s annual GDP also demonstrated a similar trend, after it surged by 8.63%, significantly surpassing the 7.5% prediction. Lynn Song, the Chief Economist for Greater China at ING Bank NV, weighed in on the situation. He acknowledged that the fourth quarter’s results consistently outperformed market forecasts.

“Taiwan has remained a major winner from the tech boom,” Song stated. He also pointed out that the 2025 results “come after an already impressive year in 2024.” 

Several financial institutions increase their predictions amid Taiwan’s impressive results 

In Taiwan, individuals have shown heightened interest in AI technologies, embracing them in their daily operations. Following this increased adoption of the technology, analysts anticipated that AI would play a significant role in Taiwan’s economic growth this year. 

This assertion prompted several financial institutions to raise their 2026 forecasts above the central bank’s 3.67% projection.  For instance, the Goldman Sachs Group Inc., a leading global financial institution, recently released a statement notifying the public of updates to its prediction, which had ranged from 4.4% to 5.1%.

To further demonstrate increased confidence in the ongoing rapid, widespread adoption of AI, Taiwan Semiconductor Manufacturing Co. announced its intention to set aside up to $56 billion this month to fund capital spending this year, exceeding expectations.

Apart from this plan, the most valuable company in Asia also expects nearly 30% revenue growth in 2026. This percentage surpassed Wall Street forecasts.

Seeing the positive sentiment around the country’s economic progress, sources sought to explain that the optimism is partly driven by the latest US-Taiwan trade agreement. Under this agreement, the tariff rate on products from Taiwan was reduced from 20% to 15%. Moreover, companies in the country were granted permission to make substantial investments and finance up to $500 billion in American operations. 

Just after this announcement was published, the statistics bureau reported that private consumption rose by 3.43% in the fourth quarter compared to a year ago, hence, representing the quickest expansion since the second quarter of 2024. In the face of a struggling consumer market, Taiwan allocated around NT$10,000 ($318) per citizen to boost the market.

Analysts predict that the CBC will maintain the policy rate at 2% this year 

In a statement, Michelle Lam, an economist at Societe Generale SA for Greater China, pointed out that, “the rise in household spending was even better than we expected, thanks to the government’s cash payments.” 

Following her remarks, several analysts expressed confidence that robust economic growth will persist. This growth is expected to enable the Central Bank of the Republic of China to sustain current interest rates beyond earlier projections.

Experts from Taiwan expect the CBC to maintain the policy rate at 2% in 2026 rather than implementing cuts in early this year as previously estimated. Meanwhile, reports mentioned that the export sector achieved peak levels in 2025. 

More than 60% of these shipments consisted of Taiwan’s advanced chips, which were exempt from US duties while the US administration examined imports of various critical products.

The country’s trade surplus with the United States also peaked at an all-time high of $150.1 billion this year, significantly exceeding last year’s $64.7 billion, more than doubling it.

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