TAIPEI (Taiwan News) — Taiwan officials warned Monday that escalating tensions in the Middle East could drive up oil prices, dampen economic growth, and increase inflationary pressure.
The Directorate-General of Budget, Accounting and Statistics said rising oil prices could reduce Taiwan’s economic growth rate by up to 0.9% and push inflation above 2%, per UDN.
DGBAS Minister Chen Shu-tzu (陳淑姿) told legislators that sustained international oil prices above US$100 (NT$3,200) per barrel would have significant economic consequences. She added that ongoing geopolitical tensions, combined with US tariffs, may force the agency to revise its economic growth and consumer price index forecasts.
In February, the DGBAS projected Taiwan’s economic growth at 7.7% for the year, with annual CPI growth at 1.68%. Chen said those forecasts were made before the latest Middle East tensions and would need reassessment. She noted that a 10% increase in oil prices could lower GDP growth by 0.12% and raise CPI by 0.24%.
Chen said a swift resolution to the conflict would likely limit the impact on daily life, as existing government price stabilization measures could mitigate inflation. However, if the conflict persists, the Cabinet’s Price Stabilization Task Force may need to introduce additional measures.
An annual CPI increase of 2% is generally considered a warning threshold for inflation. Chen said the agency is closely monitoring developments and will release updated forecasts in May.
During legislative questioning, DPP Legislator Kuo Kuo-wen (郭國文) and KMT Legislator Yen Kuan-heng (顏寬恒) noted that the DGBAS’s February forecast assumed oil prices of US$58.6 per barrel. With prices now nearing or exceeding US$100, they urged the agency to promptly revise its growth outlook.
Regarding a recent US Supreme Court ruling invalidating President Trump’s reciprocal tariffs, Chen said the impact on Taiwan would be limited. She cited existing Taiwan-US trade agreements and a memorandum of understanding on investment cooperation.
Chen added that under Section 232 provisions, Taiwan has secured preferential tariff rates for about 70% of its exports to the US. As a result, she said the main uncertainty for Taiwan’s economy this year remains the situation in the Middle East, while technology firms continue to express optimism about AI-driven export growth.
National Development Council Minister Yeh Chun-hsien (葉俊顯), who also appeared before lawmakers, said strong global investment in AI has boosted Taiwan’s exports. He said economic growth could still reach or even exceed the DGBAS’s original 7.7% forecast, adding that indicators remain positive.
