Taiwan Central Bank Raises Growth Forecast, Warns of Risks from US Trade Policies

Investing.com -- Taiwan's Central Bank has raised its growth forecast for this year, acknowledging the significant role local companies such as TSMC play in the artificial intelligence revolution. However, the bank has also warned of potential risks for next year due to the trade policies of the incoming Trump administration in the United States. In 2023, Taiwan's economy experienced its slowest growth rate in 14 years.

In a statement following the quarterly board meeting held on Thursday, the central bank highlighted Taiwan's dependence on trade, noting that the island could be negatively impacted by the import tariffs promised by newly elected U.S. President Donald Trump when he takes office on January 20. The bank indicated that uncertainty regarding U.S. trade policy has significantly increased. It advised caution by anticipating potential changes in the global trade environment.

The bank expects Taiwan's economic growth momentum to continue into next year, supported by new technologies, including the expected ongoing boom in artificial intelligence that is anticipated to further boost the island's exports.

However, the bank noted that the GDP outlook for 2025 has not yet incorporated the potential effects of changes in U.S. trade policy. President Yang Chin-long emphasized that the trade policy of the new U.S. government will be a crucial variable for Taiwan's economic growth next year.

The central bank has raised its economic growth forecast for 2024 to 4.25%, a revision from the previous estimate of 3.82% made in September. It also projects a growth of 3.13% for 2025, a slight increase from the earlier forecast of 3.08%.

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