Taiwan raises ’24 GDP growth forecast to 3.94% on AI boom

Taiwan’s trade-reliant economy is poised for a stronger-than-expected performance in 2024, bolstered by surging demand for artificial intelligence (AI) applications and steady domestic consumption, Reuters reported on Thursday.

The Directorate General of Budget, Accounting and Statistics (DGBAS) revised its annual growth forecast upwards to 3.94 per cent, up from the 3.43 per cent prediction made in February.

In the first four months of 2024, Taiwan’s exports of electronic components, information and telecommunication products, and video and audio equipment surged by 25.1 per cent to a total value of $95.1 billion.

Taiwan’s exports have increased for the sixth straight month in April, signaling positive economic growth ahead. The DGBAS has raised its export growth forecast for 2024 to 10.06 per cent, up from the previous 6.14 per cent.

The country’s economic growth is driven by exports and domestic consumption. ANZ notes that the global semiconductor cycle benefits Taiwan’s growth. The strong local stock market performance boosts wealth effects, supporting retail sales.

The DGBAS has raised its 2024 CPI forecast to 2.07 per cent, up from 1.85 per cent. ANZ predicts this will keep Taiwan’s central bank interest rates stable in 2024, with the next meeting in June following a surprise rate hike in March due to inflation concerns.

Taiwan’s economy started 2024 on a high note, growing by 6.56 per cent in the first quarter, the fastest rate since Q2 2021, with positive revisions and a promising outlook.