The Chung-Hua Institution for Economic Research (CIER) released its latest economic forecast on October 16, 2026, raising Taiwan’s 2026 growth forecast for the third time to 12.16%, the highest since 1988 and in nearly four decades. Hsien-Ming Lien, President of CIER, elaborated that continued growth in artificial intelligence demand has fueled global technology investment and trade in related products. Combined with solid domestic consumption and investment, this has produced broad-based growth across Taiwan’s domestic and external sectors in 2026. However, international energy prices and weather-related factors have pushed up prices. The consumer price index (CPI) is forecast to rise 2.06% for the year, making inflationary pressures an ongoing concern.
AI Demand Drives Exports and Investment, While Balanced Domestic and External Demand Supports Growth
Lien stated that the CIER’s third upward revision of Taiwan’s 2026 economic growth forecast to 12.16% is primarily attributable to the AI industry boom. Domestic demand and exports each contribute approximately half of the growth, indicating that the current expansion is not solely export-driven. Domestic consumption and investment also play significant roles.
Since August, Taiwan’s exports have maintained robust growth, with monthly figures exceeding US$80 billion. Full-year exports are projected to surpass US$900 billion, reflecting the rapid expansion of AI-related demand and its positive impact on the technology sector and associated supply chains.
Su-Ling Peng, Director of the CIER’s Center for Economic Forecasting, noted that rapid advances in AI have increased global investment in the technology industry and demand for related products, serving as a major driver of global economic growth. Taiwan has benefited by leveraging business opportunities within AI-related supply chains.
Growth Exceeds 10% in Each of the First Three Quarters, Then Moderates Slightly in the Fourth
Peng forecasts that Taiwan’s economy will grow by more than 10% in each of the first three quarters of 2026. Growth in the fourth quarter is projected to slow to 8.20%, primarily due to the high base established by the 12.95% expansion in the same period of 2025. This indicates that year-over-year growth may gradually moderate as a result of base effects and cyclical factors, although full-year growth is expected to remain robust.
In terms of growth sources, domestic demand is expected to contribute 6.63 percentage points to economic growth in 2026. Private consumption and investment will contribute 2.20 and 2.15 percentage points, respectively, serving as the main pillars of domestic demand. In foreign trade, AI demand is driving double-digit growth in both exports and imports of related products. After deducting imports, net external demand is expected to contribute 5.53 percentage points to economic growth.
CPI Forecast to Rise 2.06% as Energy Prices and Weather Put Pressure
The CIER forecasts that the consumer price index will rise by 2.06% in 2026, an increase from 2025 and slightly above 2%. Lien noted that there is public concern regarding whether robust economic growth will be accompanied by increased inflationary pressure. As a result, price trends will require ongoing monitoring.
Peng stated that international energy prices remain elevated. Although the government has implemented price stabilization measures, spillover effects from higher energy costs may continue to increase overall prices. Weather conditions are also contributing to inflationary pressure. Nevertheless, Taiwan’s full-year inflation is expected to remain relatively stable compared to other economies.
Overall, AI demand continues to serve as a primary driver of Taiwan’s economic growth, with exports, investment, and consumption collectively supporting the expansion. Despite rapid growth, it is essential for Taiwan to monitor changes in external demand, the sustainability of economic momentum, and the impact of energy prices and weather conditions on inflation.
Source: Commercial Times (October 16, 2026). Target Within Reach: the CIER Raises Taiwan’s 2026 Economic Growth Forecast for the Third Time to 12.16% https://www.ctee.com.tw/news/20261016700725-430102