TAIPEI (Taiwan News) — Uncertainty and a slowdown in the AI sector will lead Taiwan’s economic growth to drop to 2.4% in 2026, Taiwan Ratings Corporation said Tuesday.

The ratings agency agreed with other forecasters that the rapid development of the AI sector is fueling the country’s exports, helping gross domestic product to grow 6.7% this year. However, if investment in basic AI infrastructure relents in 2026 and international trade remains under the shadow of trade wars and tariffs, Taiwan’s economy will only grow 2.4% that year, per CNA.

Asia-Pacific economies will also suffer in 2026 under a weaker dollar, sluggish consumption in China, US tariffs, and falling interest rates in the US and in the region, the agency said. Falling investment in AI will not be offset by rising private consumption and investment at a level sufficient to keep the economy expanding rapidly.

Taiwan Ratings predicted inflation and interest rates will also fall slightly, while the New Taiwan dollar exchange rate will continue to trend higher. The technology sector will still make progress, but more traditional sectors of the economy are less likely to recover.