Analysis: Academia Sinica Raises Taiwan's 2026 GDP Growth Forecast to 10.16%
Academia Sinica has raised its 2026 economic growth forecast for Taiwan to 10.16%, up from 3.71% in December, citing surging global demand for AI technology. The institute also warned of risks including high leverage in the AI sector, geopolitical tensions and US tariffs, which could stoke inflation. It expects year-on-year growth to level out in the second half of the year due to a higher comparison base from last year. TaiwanPlus spoke with Lee Torng-her, economics professor from National Dong Hwa University to find out more.
Taiwan GDP Surges
REPORTER:
Taiwan’s top research institute has raised its economic growth outlook for 2026, citing booming global AI demand.
Academia Sinica raised its GDP growth forecast to 10.16 percent, up from a conservative 3.71 percent in December. But the institute is also flagging high leverage in the AI sector as a key risk, warning that geopolitical tensions and US tariffs could stoke inflation. It also says year-on-year economic growth is likely to level out in the second half of this year due to a higher comparison base from last year.
AI Hardware Drives Taiwan’s Economic Landscape
REPORTER:
Global demand for AI is primarily driven by the need to build the hardware infrastructure that supports it. In fact, behind AI development is the construction of the hardware foundation. This is what we call the foundational infrastructure, which includes data centers that require a tremendous amount of hardware. Taiwan has a very comprehensive supply chain for manufacturing AI hardware. That also leads to a chain effect. As more people become involved in the AI industry, whether by working in AI hardware manufacturing or by investing in AI-related stocks, they benefit from the resulting wealth effect leading to more consumer spending. Our traditional industries were hit relatively hard by US tariffs. We don’t know when Trump might change course again, but for now, it appears that exports from our traditional industries have rebounded, shifting from negative to positive growth.
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Rising Energy Prices and Economic Risks
REPORTER:
Our government has been taking measures to stabilize energy prices. In other words, these measures have helped slow increases in energy prices, which has reduced the pass-through effect of rising energy costs on inflation. However, in the long term, it's not possible to keep suppressing energy prices indefinitely or prevent them from adjusting in line with increases in international energy prices. It is unlikely that prices will return to pre-war levels within about a year. This situation may eventually become the new normal. This means that persistently high inflation in the future may be unavoidable. The reason is that more than 90% of Taiwan’s energy comes from imports. Energy is required to produce almost everything, whether it is oil or electricity.
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Leveraging Strengths in Semiconductors and AI
REPORTER:
Based on Taiwan’s semiconductors and AI development, we have a comparative advantage in these industries. This advantage has led to recent concerns that our economy has become overly dependent on AI-related industries. But since this is our strength, it is impossible to deliberately abandon it. In order to reduce future risks, we need to find ways to further strengthen our traditional industries and help them leverage AI so that they can be upgraded and become more competitive.
