GDP growth forecast lifted to 12.8%: Standard Chartered

OPTIMISTIC OUTLOOK: Standard Chartered is betting on AI, increasing the 2027 economic outlook above what it had already predicted, as well as moderate inflation

• By Crystal Hsu / Staff reporter

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Standard Chartered Bank yesterday raised its growth forecasts for Taiwan for a second time, projecting the economy would expand 12.8 percent this year and 7.5 percent next year, as the artificial intelligence (AI) investment boom continues to drive exports and business investment while gradually supporting a recovery in household consumption.

The new forecasts compare with the bank’s previous projections of 11.5 percent growth this year and 6.5 percent next year.

Taiwan’s economy grew 14.36 percent year-on-year in the third quarter, beating market expectations, as surging global demand for AI-related products boosted technology exports and prompted businesses to expand production capacity and increase capital spending, Standard Chartered said.

Standard Chartered Bank chief economist for Greater China and North Asia Ding Shuang, left, and senior economist for Greater China and North Asia Tommy Wu pose for a photograph in Taipei on March 19.

Photo: CNA

“Taiwan’s AI growth story is entering a new phase, with the economic benefits of AI expanding beyond exports to investment and consumption,” said Tommy Wu (胡東安), the bank’s senior economist for Greater China and North Asia.

Export momentum has remained strong this quarter, with outbound shipments soaring 58.9 percent year-on-year to a record US$96.76 billion last month, the first time monthly exports have exceeded US$90 billion.

Exports have grown for 36 consecutive months, the Ministry of Finance said on Monday.

Although technology products remained the main driver, traditional industries staged a meaningful recovery, with exports of metal, mineral and plastic products posting double-digit growth, ministry data showed.

The strength of exports is beginning to translate into stronger domestic demand, with household consumption showing signs of recovery, Wu said.

“What stands out is not just the pace of growth, but also the increasingly diversified sources of growth,” he said.

Despite a higher comparison base this year, Taiwan’s economy is expected to maintain strong momentum next year, supported by continued AI-related investment and improving domestic demand, Wu said.

The upward revisions reflect an increasingly broad-based expansion, with business investment and household spending playing a growing role alongside technology exports in driving economic growth.

On the inflation front, Standard Chartered kept its forecast for the consumer price index growth this year unchanged at 2.1 percent, while raising its projection for next year to 2.1 percent from 2 percent previously.

Although a higher comparison base should help moderate inflation next year, uncertainty over global energy supplies could push up energy prices and raise the cost of industrial goods through higher import prices, Wu said.

A sustained recovery in domestic demand could add to inflationary pressures, he added.

AI-related demand and business investment are expected to remain the main engines of growth, while recovering household consumption should provide an additional source of support, the bank said.

The Directorate-General of Budget, Accounting and Statistics is scheduled to update its economic growth forecast on Nov. 27.