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- Taiwan boosts 2025 GDP to 4.5%, fueled by AI-related exports and private investment growth.
- Merchandise exports expected to reach $589.2 billion, marking record growth amid global tech demand.
- Domestic consumption remains weak, with private consumption growth forecast at just 0.85%.
- Taiwan’s semiconductor dominance provides resilience amid trade tensions and geopolitical uncertainty.
Taiwan’s government has raised its GDP growth projection for 2025 to 4.5%, a significant jump from the 3.1% forecast issued in May.
Officials attribute this increase to strong export performance and rising private investment driven by global demand for artificial intelligence (AI) technology.
Despite ongoing US tariff concerns and potential semiconductor duties, the island’s economy has displayed remarkable resilience.
Exports Drive Economic Surge
The government projects real exports to rise 23.7% in 2025, reflecting strong international demand for Taiwan’s semiconductors and ICT products.
Merchandise exports are expected to hit US$589.2 billion in 2025, a 24% year-on-year increase, and are projected to climb further to US$602.1 billion in 2026.
Analysts highlight that this growth is closely linked to global AI infrastructure expansion, including the construction of data centers that require advanced chips.
Domestic Spending Remains Soft
While exports and investment are surging, domestic consumption is lagging behind. Private consumption growth is forecasted at just 0.85% for 2025, the lowest in four years.
Economists warn that the imbalance between strong export-driven growth and weak domestic spending may pose challenges for long-term economic stability. Nonetheless, Taiwan’s GDP is projected to grow 2.8% in 2026, with per capita GDP expected to surpass US$40,000 for the first time.
Semiconductors Provide Strategic Edge
Taiwan produces over 60% of the world’s raw semiconductors and more than 90% of the most advanced chips, providing the island with unique leverage in global tech supply chains.
This dominance helped secure exemptions from previous US tariffs, underscoring Taiwan’s strategic importance. Analysts say Taiwan’s semiconductor strength allows the economy to weather geopolitical pressures that might disrupt other regions.
AI Infrastructure Spurs Record Growth
The surge in AI-driven demand has accelerated Taiwan’s export growth dramatically with firms like Foxconn, the world’s largest contract electronics maker, reporting Thursday that its second-quarter operating profit rose 27% year over year.
Taiwan’s Foxconn, the world’s largest contract electronics maker, reported Thursday that its second-quarter operating profit rose 27% year over year, as it leans into its artificial intelligence server business.
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— CNBC International (@CNBCi) August 14, 2025
The revised forecast, jumping from an initial 8.99% to 24.04%, reflects unprecedented momentum as global companies invest heavily in AI infrastructure.
In Q2 2025, Taiwan achieved 8.0% quarterly growth, the highest rate in four years, demonstrating how AI adoption directly translates into economic performance. Experts note that Taiwan’s manufacturing and semiconductor capabilities are now central to global technology supply chains, creating premium pricing opportunities and sustaining export-led growth.
Taiwan’s experience highlights how specialized industries can bolster national economic resilience, even amid global uncertainty. As AI continues to reshape technology demand worldwide, Taiwan is positioning itself as a critical hub, balancing export growth with cautious domestic spending strategies to ensure sustainable economic momentum.
