TAIPEI (Taiwan News) — Taiwan’s economy is still likely to grow 7% this year if the war in Iran does not last too long, the National Development Council said Thursday.

In March, the Directorate-General of Budget, Accounting and Statistics raised its forecast for 2026 gross domestic product growth to 7.71% from 3.54%. However, that was before hostilities erupted in the Middle East, triggering oil price increases likely to create energy supply problems and inflationary pressure.

NDC Minister Yeh Chun-hsien (葉俊顯) said seven institutes and think tanks predicted economic growth would stay close to the government’s 7.71% forecast if the war ended within a short time, per CNA. In that event, the consumer price index would also likely remain below 2%, according to Yeh.

The Cabinet announced Thursday that it was freezing public transportation fares to offset the impact of the Iran war. As a result, inflation could stay below 1.5% for the first quarter and under 2% for the whole year, the government said.

After the war began, the Central Bank said Taiwan’s economy would grow 7.28% this year, Yeh said. Four institutes and think tanks predicted growth of more than 8%, with the most optimistic forecasting 8.6%. The lowest forecasts were 6.22% and 6.92%, according to the minister.

The reason for the relative optimism was that the war was unlikely to affect the development of AI and strong demand for AI products, he said. Both would continue to drive exports and domestic investment during the year, Yeh added.