TAIPEI (Taiwan News) — DBS Bank said Monday that Taiwan’s “high growth, low inflation” economic model may be disrupted by rising global energy prices, raising its consumer price index forecast to 1.9%.
DBS on Monday held its Q2 economic and investment outlook briefing, outlining macroeconomic trends and market risks, per CNA. The bank said global inflation pressures are rising as the Middle East conflict continues to drive energy market volatility.
DBS Group Senior Economist Ma Tie Ying said the conflict in the Middle East has disrupted global energy flows and supply chains. She said oil prices may take months to stabilize depending on shipping conditions in the Strait of Hormuz and infrastructure recovery, per Liberty Times.
Ma said the prolonged energy shock could lift global inflation and create stagflation-like risks for the world economy. She added Taiwan is unlikely to enter stagflation but may see its economic model weaken.
Under DBS’s baseline scenario, Brent crude is assumed to average NT$2,500 (US$80) per barrel this year. Inflation is expected to rise toward 2% from May and stay near that level through year-end, driven mainly by energy and food prices.
DBS said leading indicators point to rising inflation pressure and softer export momentum in the second quarter. It cited March PMI data showing sharply higher input costs and slightly weaker export orders, alongside weakening consumer confidence.
On growth, Ma said rapid development of agentic AI continues to support global demand for advanced computing and cloud infrastructure. She said the AI-driven export cycle is expected to remain resilient in the near term.
Ma added Taiwan still faces tariff risks, including Section 301 and Section 232 semiconductor measures, but remains in a relatively favorable position. She said continued market opening and increased US investment could support more favorable treatment.
DBS kept its GDP growth forecast for this year at 7%, citing stronger-than-expected first-quarter performance. It said it expects growth to peak early in the year before slowing in the second half due to weaker non-AI demand and rising cost pressures.
