TAIPEI (Taiwan News) — Taiwan’s economy posted its fastest quarterly growth in nearly 39 years in the first quarter, but Standard Chartered warned Monday that Middle East tensions and rising cost pressures could weigh on growth in the second half of the year.
The Directorate-General of Budget, Accounting, and Statistics estimated first-quarter GDP growth at 13.69%, up 2.23 percentage points from its earlier forecast. It marked the highest single-quarter expansion since the third quarter of 1987.
Standard Chartered Greater China and North Asia senior economist Tommy Wu said the strong performance was driven primarily by export expansion linked to AI demand, per CNA. He said the “AI super cycle” is likely to continue supporting Taiwan’s growth momentum in the near term.
Official data showed March export orders reached NT$2.88 trillion (US$91.12 billion), up 65.9% year-on-year. Electronics and ICT products recorded particularly strong gains, rising 73.7% and 120.9%, respectively, suggesting continued strength into the second quarter.
However, Wu warned that risks could emerge in the second half of the year as geopolitical tensions in the Middle East begin to feed through into higher energy and import costs. He said semiconductor-related industries may remain resilient due to AI demand, but more price-sensitive sectors could come under pressure.
Wu said traditional industries such as textiles, metals, machinery, transportation equipment, food processing, plastics, and chemicals could face a dual squeeze from rising costs and weakening global demand, per Anue. He also pointed to a high base effect from last year that could weigh on year-on-year growth comparisons.
Even with continued AI-driven exports, Standard Chartered said Taiwan’s second-half growth outlook faces downside risks. The bank urged monitoring energy prices and supply chains as geopolitical uncertainty persists.
