The Chung-Hua Institution for Economic Research (CIER) held the “2026 Economic Outlook Forum” on January 19, 2026, to release its latest macroeconomic forecast. Hsien-Ming Lien, President of the CIER, indicated that investment and export momentum has strengthened due to the continued expansion of AI demand. Taiwan’s economic growth rate is projected to reach 4.14% in 2026, higher than the forecast by the Directorate-General of Budget, Accounting and Statistics (DGBAS). The overall economy is transitioning from “external heat, domestic warmth” in 2025 to “both domestic and external warmth,” and there remains room for upward revision as uncertainties gradually dissipate.
Advanced Process Capacity Constraints: AI Becomes Taiwan’s Long-Term Growth Engine
President Hsien-Ming Lien stated that AI has become a key driver supporting Taiwan’s economy, with demand intensity exceeding original expectations. Taking TSMC as an example, capital expenditure in 2026 is expected to reach US$52 to US$56 billion, indicating highly constrained advanced process and packaging capacity. Existing capacity can only satisfy partial AI demand. Even as companies invest in the United States, there exists a time lag between construction progress in Taiwan and overseas facilities. Related deployments have not crowded out domestic investment, and Taiwan’s technological and industrial advantages will continue to deepen.
Regarding 2026 performance, the CIER has also increased its prediction for 2025 GDP growth to 7.43%. This adjustment reflects significant momentum in investment and exports, which is mostly driven by advances in AI. On the pricing front, the annual growth rate of the Consumer Price Index (CPI) is expected to be 1.66% in 2025 and slightly lower at 1.64% in 2026. Overall inflationary pressure remains moderate, with limited impact on economic growth.
Regarding the exchange rate, President Hsien-Ming Lien noted that with the trade surplus maintaining high levels and supported by export momentum, the New Taiwan Dollar is expected to appreciate slightly against the US Dollar, with the average exchange rate for 2026 projected at approximately NT$30.33. Tien-Wang Tsaur, Chairman of the CIER, emphasized that AI has transformed from a short-term hotspot into a core engine driving productivity enhancement and industrial structural transformation. How to transform AI momentum into economic benefits for all citizens will be a critical issue for both policymakers and industry in the coming years.
Author: CIER Editorial Team
Date: January 20, 2026