CIER forecasts Taiwan economy will grow 4.14% this year

中經院預測，台灣經濟今年將成長4.14%。

TAIPEI (Taiwan News) — The Chung-Hua Institution for Economic Research on Monday forecast Taiwan’s economy to grow 4.14% this year, the most optimistic projection among domestic think tanks.

CIER said uncertainty over US tariff policy disrupted markets in 2025, but early stockpiling by firms and AI-driven investment and export momentum became primary growth engines, per CNA. It projected full-year economic growth for 2025 at 7.43%, above the Directorate-General of Budget, Accounting and Statistics’ 7.37% forecast.

For this year, the think tank said demand for AI hardware will remain strong, supporting imports and exports of related products. Due to high base effects, growth is expected to be stronger in the first half at 5.28% and moderate in the second half at 3.10%.

CIER forecasts a 1.64% increase in the consumer price index in 2026, citing stable global commodity prices and falling oil prices. It noted that exchange rate volatility last year had rattled markets.

The US Federal Reserve's three rate cuts in 2025 and Taiwan’s NT$4.74 trillion (US$150.12 billion) merchandise trade surplus with the US are expected to add appreciation pressure on the Taiwan dollar. The currency is forecast to strengthen from NT$30.88 per US dollar in the first quarter to about NT$29.77 in the fourth quarter, averaging NT$30.33 for the year, up about 2.83% from 2025.

Attention has turned to how the newly announced US-Taiwan tariff deal may affect economic performance this year. CIER President Lien Hsien-ming (連賢明) said the deal was announced on Friday, with further details to be released in the coming weeks.

Although the current forecast does not include the results, Lien said the impact is positive overall for traditional industries, the technology sector, and investment. He said Taiwan’s traditional industries have long faced disadvantages in international competition.

Even under the World Trade Organization framework, Taiwan’s tariff rates have been higher than those of Japan and South Korea. With tariffs now cut from 20% to 15%, traditional industries will be able to compete on a more level playing field, which Lien described as a major boon.

Lien said the Section 232 investigation into semiconductor tariffs had dragged on amid conflicting information, including rumors of tariffs as high as 100%, creating significant uncertainty for Taiwan’s semiconductor industry. With the situation now settled, he said technology firms are likely to benefit in terms of investment and share prices.

He added that a key highlight of the negotiations was two-way investment, with the US agreeing to cooperate with Taiwan on five “trusted industry sectors,” which include semiconductors, AI, the military, security and surveillance, and next-generation communications. Beyond semiconductors, Lien said startups and emerging industries are also expected to benefit from deeper US technological cooperation.

Asked whether the positive assessment could lead to an upward revision of this year’s growth forecast, Lien said more details would emerge in the coming weeks, allowing for a clearer evaluation of the economic impact. He added that the Legislative Yuan must still review the agreement, and whether it passes smoothly remains an important uncertainty.