CIER raises Taiwan’s economic growth forecast to 12.16% — Taipei Times

Taiwan’s Chung-Hua Institution for Economic Research (CIER) has raised its forecast for Taiwan’s economic growth this year to 12.16%. According to the institution’s estimate, this will be the highest economic growth rate in 39 years. The previous July forecast was 10.35%, Taipei Times reports.

Domestic demand and exports

CIER expects domestic demand to account for 55% of the projected annual growth, while net external demand will account for the remaining 45%. Institute President Lien Hsien-ming said that both domestic and external demand are showing strong results this year.

The institution cited high demand for artificial intelligence-related products as the main driver of economic activity. It supports exports, investment and consumer spending. At the same time, CIER revised its forecast primarily because domestic demand grew more strongly than expected, rather than because of exports.

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Investment and inflation

Global cloud service providers continue to increase capital expenditure, prompting Taiwanese manufacturers to expand capacity. Together with increased investment in automation in non-technology sectors, this is expected to support 10.77% growth in private investment. Private consumption is forecast by CIER to increase by 4.94%.

In the third quarter, the economy is expected by the institute to grow 12.73% year-on-year, and in the fourth quarter by 8.2% due to a higher comparison base. The annual inflation forecast was raised from 2.02% to 2.06%, while next year’s economic growth forecast was revised from 3.71% to 5.97%.

Among the potential risks to the high growth rates, CIER cited changes in the monetary policies of major economies, movements in financial markets, domestic investment, geopolitical risks, and relations between Taiwan and China.