TAIPEI (Taiwan News) – Academia Sinica lowered its forecast for Taiwan’s economic growth to 2.93% from above 3%, reports said Friday.

In December, the institute had still predicted 3.1% for the year, but Taiwan’s businesses needed to improve their resilience to face down uncertainty during the second half, per CNA. International uncertainty resulted in a gross domestic product expected to fall between 2.54% and 3.17%.

The Academia Sinica said its latest forecast was based on US tariffs between 15% and 20% and on an exchange rate of NT$29 for US$1. If the Trump administration sets its tariffs for Taiwan at 20% and if the New Taiwan dollar appreciates further to NT$28, then economic growth might fall to 2.54%, the forecasters said.

During the first half of 2025, demand for AI products and orders ahead of the new US tariffs fueled Taiwan’s economy, but global demand might weaken during the second half because of the tariffs. The variations in tariffs from country to country and general uncertainty might dampen consumer sentiment, weakening economic growth for the rest of the year.

Private consumption was likely to grow 1.53% amid pronounced swings for the stock market and exchange rates, while private investment was expected to rise 5.46%, with the semiconductor supply chain expanding, but other sectors affected by an unclear international economic outlook.