TAIPEI (Taiwan News) — Taiwan’s AI boom is supercharging exports and investment, prompting the Taiwan Institute of Economic Research to raise this year’s GDP growth forecast to 5.94%.

The revised figure marks a 2.92 percentage-point jump from TIER’s July estimate of 3.02%, driven by explosive AI-related demand across the tech sector, per CNA. TIER said that while US tariffs and China’s slowing market are weighing on exports, surging AI investment in the US has fueled Taiwan’s semiconductor and equipment production.

The AI wave has triggered expansion among leading chipmakers, boosting upstream and downstream suppliers. Global tech firms are also setting up R&D and data centers in Taiwan, with private investment projected to rise 10.97% in real terms next year.

Exports are forecast to surge 24.98% in 2025 before slowing to 3.08% in 2026 as a high base kicks in. TIER said AI demand will keep supporting exports, but electronics and IT growth should moderate as the market stabilizes.

TIER Macroeconomic Forecasting Center Director Sun Ming-te (孫明德) cautioned that the AI frenzy carries risks. He noted soaring capital spending has yet to translate into significant productivity gains and urged vigilance against overheating.

TIER President Chang Chien-yi (長建一) said short-term overheating is unlikely, but growth may cool in 2026 as global AI infrastructure matures. Sustained expansion, he added, will depend more on end-user applications than upstream investment.

Chang said GDP could top 6% this year, buoyed by government stimulus, though the institute kept a conservative 5.94% estimate. He added that progress in Taiwan–US tax talks may secure a reduced 15% rate, while Taiwan could face concessions on energy imports and tariffs.

TIER expects inflation to ease, with CPI rising 1.70% in 2025 and 1.66% in 2026. The institute said global price pressures are easing but warned climate change, labor shortages, and geopolitical tensions could still push costs higher.