TAIPEI (Taiwan News) — Swiss investment bank UBS on Monday raised its forecast for Taiwan's 2026 economic growth to 9.9%, citing strong economic data and reduced uncertainty following a reported US-Iran agreement.
William Deng (鄧維慎), UBS senior economist for Asia, said the revised forecast is above the current market consensus of 9.2% and reflects stronger-than-expected economic momentum. The latest adjustment marks the third time UBS has raised its forecast for Taiwan's GDP growth this year, per Liberty Times.
Deng noted that the central bank had already significantly upgraded its own full-year GDP forecast at its second-quarter board meeting, raising the estimate from 7.28% to 9.45%. UBS has maintained one of the most optimistic outlooks among major forecasters in recent quarters. In April, it raised its 2026 GDP forecast to 8%, compared with a market consensus of 6.6% at the time.
Growth momentum is expected as Taiwan's economy expanded at an annualized rate of 14.5% in the first quarter, providing a strong foundation for further upward revisions, according to Liberty Times. UBS expects second-quarter GDP growth to remain comfortably in double digits despite recent energy market disruptions.
Deng attributed the stronger outlook primarily to broad-based improvements in manufacturing and exports. After slowing briefly in March due to higher oil prices, Taiwan's manufacturing purchasing managers' index rebounded to 56.1 in April and May, reaching one of the highest levels in recent years, Liberty Times reported.
Export performance also remained robust, while value-added output from the technology sector continued to reach new highs during the second quarter, Deng said. Despite rapid economic expansion, inflation has remained relatively contained. The temporary closure of the Strait of Hormuz pushed energy prices higher, contributing to a 2.2% year-on-year increase in the consumer price index in May.
As a result, the central bank revised its full-year inflation forecast upward from 1.80% to 1.91%, broadly in line with the UBS estimate of 1.9%. UBS said Taiwan's inflation outlook remains moderate and that upside risks appear manageable, per the report.
At its June 18 board meeting, the Central Bank unanimously voted to leave interest rates unchanged, citing effective government measures to stabilize inflation, moderate domestic credit growth, and manageable increases in housing prices, per Liberty Times.
The rediscount rate, secured lending rate, and short-term lending rate remained unchanged at 2.00%, 2.375%, and 4.25%, respectively, marking the ninth consecutive policy meeting without a rate adjustment. The Central Bank also left the reserve requirement ratio and existing real estate lending controls unchanged.
UBS expects the Central Bank to maintain its current interest-rate policy in the coming months, while retaining the option to introduce targeted measures for specific sectors if necessary.
