Taiwan’s Economic Outlook for 2024

By Jeanny Kao and Faith Hung

TAIPEI (Reuters) – Taiwan’s trade-driven economy is expected to grow at a slightly slower pace in 2024 than previously forecast, with exports weaker than projected. This comes despite an AI boom that has boosted demand for tech products, according to the statistics office on Friday.

The revised but still positive outlook underscores Taiwan’s growing prominence in the global technology supply chain, reinforcing the island’s crucial role in catering to the increasing global demand for AI technologies.

Taiwan serves as a key link in the global technology supply chain for major companies such as Apple Inc (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), and is home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Gross domestic product is now expected to expand by 3.90% this year, lower than the earlier forecast of 3.94% issued in May.

Yu-tai Tsai, an official at the Directorate-General of Budget, Accounting and Statistics, mentioned that uncertainty exists within the AI industry, particularly regarding the shipping schedules for high-end products and expected growth. Nonetheless, the overall outlook remains positive.

Analysts suggest that the central bank is unlikely to adjust interest rates. Kevin Wang, an analyst at Taishin Securities Investment, noted that with economic performance transitioning from strong to mild growth, the central bank will likely maintain current rates rather than follow the U.S. Fed’s lead on cuts.

Central bank governor Yang Chin-long stated in July that there are no imminent plans for a rate cut. In June, the central bank left its benchmark discount rate at 2%, unchanged since March, as inflation has been trending down.

The statistics agency now predicts 2024 exports will grow by 8.71% compared to last year, down from an earlier prediction of 10.06%. In 2023, exports experienced a decline of 9.8% year-on-year.

Additionally, the statistics office forecasts the 2025 consumer price index will be at 1.91%, slightly below the central bank’s target of 2% and the 2.17% forecast for this year.