DBS maintains Taiwan GDP growth forecast at 11.6% this year — Taipei Times
Singapore’s DBS Bank has maintained its forecast for Taiwan’s GDP growth at 11.6% this year and 5.6% next year. The bank named surging demand for artificial intelligence technologies, resilient exports and investment as the main drivers of the economic upswing, Taipei Times reports.
AI supports exports and investment
DBS senior economist Ma Tieying said at a news conference in Taipei that the AI development cycle remains a key driver of Taiwan’s economic growth. According to her, information and communications technology products and electronic components accounted for nearly 80% of Taiwan’s exports in the first nine months of the year.
DBS expects export growth to slow from the current quarter after unusually high figures, but to remain significant. It will generally depend on capital expenditure by US cloud providers and semiconductor sales. Investment in Taiwan will show similar dynamics, according to the bank’s assessment.
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Technology companies continue to report strong revenue growth, including manufacturers of semiconductors, servers and personal computers. Higher capacity utilization at Taiwan’s leading contract chipmakers also indicates sustained demand for investment.
Stock market and energy prices
The bank also links the AI boom to stronger domestic demand through rising financial wealth and wages. The TAIEX index has risen by about 70% since the beginning of the year, while Taiwan’s stock market capitalization has become the fifth largest in the world. Stocks and mutual funds account for nearly 30% of households’ financial assets.
DBS forecasts that headline inflation will remain near 2.5% in the current quarter. Its estimates for the full year were kept at 2%, and at 2.1% for next year. Ma noted that state-owned CPC Corp Taiwan and Taipower are absorbing a significant share of rising energy costs, limiting the impact on consumers. At the same time, losses at these companies may force authorities to choose between additional subsidies and higher domestic energy prices after local elections next month.
