The Chung-Hua Institution for Economic Research (CIER) released its latest economic forecast on July 22, 2026. It sharply revised its 2026 economic growth rate upward to 10.35% due to stronger-than-expected exports. The economy is exhibiting strong momentum in both domestic and external demand. However, the conflict in the Middle East has pushed up international oil prices and generated inflationary pressure. The CIER estimates the annual consumer price index (CPI) growth rate will exceed 2% for the full year to reach 2.02%.
Hsien-Ming Lien, President of the CIER, pointed out that Taiwan benefits from persistently strong demand for artificial intelligence (AI), high-performance computing, and advanced semiconductor manufacturing. Exports of AI-related goods maintained double-digit growth in the first half of the year. This added momentum to economic growth. Manufacturers have expanded production capacity and capital expenditures. Furthermore, the surging Taiwan stock market has created a wealth effect and boosted securities transaction tax revenues to support consumer spending. This ensures stable domestic demand performance.
The CIER significantly raised its full-year economic growth rate forecast to 10.35% today. This represents an increase of 3.13 percentage points from its April projection. The CIER is the second domestic think tank to predict a growth rate exceeding 10% this year, following the Institute of Economics at Academia Sinica.
On the price front, the ongoing conflict in the Middle East has driven international oil prices higher again. The shadow of inflation remains difficult to eliminate. The CIER predicts the full-year annual CPI growth rate will rise to 2.02%.
Looking ahead to 2027, the CIER estimates an economic growth rate of 3.71%. The annual CPI growth rate is expected to fall back to 1.89%.
President Lien stated that the key to an optimistic economic outlook is “extremely, extremely robust exports.” Total merchandise exports could exceed US$900 billion for the full year if current trends remain unchanged. Domestic and foreign institutions have also recently issued optimistic forecasts regarding Taiwan’s economic prospects. They predict a full-year economic growth rate exceeding 10%.
Notably, external demand is no longer the sole driver of economic momentum this year. Domestic demand has also gradually accelerated. Su-Ling Peng, Director of the Center for Economic Forecasting at the CIER, noted that the 2026 economic growth model exhibits strength in both domestic and external sectors. Domestic demand will contribute 4.73 percentage points, while net external demand will account for 5.62 percentage points.
However, market concerns regarding a potential AI bubble have recently emerged. This temporarily triggered severe volatility in international stock markets. Director Peng analyzed that the AI boom saw indiscriminate, explosive growth in the first half of 2026. The situation will shift slightly in the second half. Companies are becoming more cautious regarding AI capital expenditures. This stems from a high base period, companies entering a validation phase for AI investment returns, and various supply chain and delivery lead time impacts. AI demand growth will slow down but remain at a high level. Its structural growth remains unchanged.
The media focused on the CIER revising its full-year price forecast upward to breach the 2% inflation warning threshold. President Lien stated the key factor is the duration of the U.S.-Iran war. A swift resolution to the conflict will result in a smaller impact on domestic prices. Conversely, prolonged fighting will escalate inflationary pressure.
The CIER forecasts the New Taiwan dollar will average around NT$31.5 against the U.S. dollar for the full year in 2026. However, President Lien noted that developments in the Middle East conflict influence the U.S. dollar. U.S. Federal Reserve interest rate decisions also play a role. These factors warrant continuous monitoring.
The electronic and information communications technology industries have skyrocketed thanks to AI dividends. Their performance in production, exports and wages far outpaces other sectors. This has sparked public discussion regarding a “K-shaped economy.” The economic situation is diverging like the letter “K.” Different demographic groups, industries, and income classes are experiencing vastly different economic outcomes. The wealthy class is thriving to form the upward-extending arm of the “K.” The lower-income class is struggling in hardship to form the downward-extending arm.
Source: Economic Daily News (July 23, 2026). The CIER Revises This Year’s Economic Growth Rate Upward to 10.35%, Full-Year CPI Exceeds 2%. Economic Daily News. https://money.udn.com/money/story/10869/9643995