The U.S.-Iran conflict has dragged on for over a month, compounding a series of geopolitical disruptions this year that have led to downward revisions in economic growth for most countries. However, the Chung-Hua Institution for Economic Research (CIER) stated on the 17th that “Taiwan is a rare exception.” Buoyed by the booming development and demand in AI technology, Q1 exports were unexpectedly robust, giving economic growth a stellar start. Consequently, the CIER has upgraded its full-year economic growth forecast to 7.22%, marking a 0.3 percentage point upward revision from its January estimate and completely defying the global economic downturn.
The CIER published its revised Q2 forecast for the Taiwanese economy on the 17th, providing updated figures and analyzing the economic prospects and underlying factors for this year and the next. Hsien-Ming Lien, President of the CIER, stated that Q1 exports were unexpectedly strong—far exceeding last year’s estimates. Therefore, the full-year economic growth forecast was still revised upward despite the pressures of Middle East conflicts and rising inflation.
Su-Ling Peng, Director of the Center for Economic Forecasting at the CIER, pointed out that the Asian Development Bank (ADB) and the international financial institution JPMorgan Chase are also bullish on Taiwan’s economic growth this year. The former recently projected a 7.6% growth rate, while the latter forecasted an even higher 8.6%. Taiwan is outperforming both China and South Korea due to the exceptional performance of its information and electronics industry.
Bolstered by demand for AI products in Q1, the CIER predicts that the economic growth rate will once again break into double digits, reaching 13.19%. Growth is expected to moderate in subsequent quarters due to base effects, with the remaining three quarters projected at 8.30%, 6.05%, and 2.30%, respectively. This reflects a “high early, stable later” trajectory: robust growth in the first half (10.69%) and steady-moderate expansion in the second half (4.10%). The growth model is characterized as “hot externally, warm internally,” with domestic demand contributing approximately 2.72 percentage points and net foreign demand contributing 4.50 percentage points.
Disruptions to energy supplies stemming from the Middle East conflict are gradually impacting inflation for the year. President Hsien-Ming Lien noted that while current inflation estimates have been revised upward from original projections, the CIER expects the rate to remain within 2%. The critical factor is whether domestic energy prices will remain frozen and if the government will continue its price control measures. “This factor will have a fairly significant impact,” he stated.
Regarding domestic inflation trends for 2026, Director Su-Ling Peng indicated that international oil prices are trending upward due to the escalating Middle East conflict and the blockade of the Strait of Hormuz. This pressure is gradually passing through to production and end-consumer prices, driving up overall price levels. However, since Taiwan’s Q1 CPI annual growth rate was relatively low at 1.23%, government measures such as fuel subsidies and electricity price freezes have mitigated the upward pressure on the CPI. The full-year consumer price index (CPI) annual growth rate for 2026 is projected to be approximately 1.98%, slightly below the 2.0% threshold.
Source: Commercial Times (April 17, 2026). Strong AI Demand Prompts the CIER to Upgrade Taiwan’s GDP Forecast to 7.22%. https://www.chinatimes.com/realtimenews/20260417002521-260410