AI demand sets up optimistic Taiwan economic growth outlook

Encouraged by a surge in exports, Taiwan’s government has changed its predictions for the country’s economic growth in 2026. Taiwan now expects the gross domestic product to grow by 7.37% in 2025 and 3.54% in 2026. 

Taiwan’s government has raised its prediction for economic growth in 2026 to 3.54% up from 2.81% as exports continue to surge due to record global demand for artificial-intelligence (AI) hardware. 

For 2025, gross domestic product (GDP) is now expected to grow by 7.37%. This will be the fastest pace since 2010. 

Taiwan export growth 

Exports are expected to expand by 6.32% in 2026, after a massive surge this year. The export surge is largely fueled by soaring global demand for semiconductor chips, servers, and other AI-related hardware. 

In October 2025 alone, Taiwan’s exports jumped 49.7% year-on-year to a record $61.80 billion. Taiwanese shipments to the United States also soared 144.3% year-on-year.

Taiwan Semiconductor Manufacturing Company (TSMC),  the world’s largest contract chipmaker, contributed heavily to the export surge, with record profits and rising revenue, as global tech companies rush to build data centers and expand their AI capacity. It reported a 16.9% rise in sales.

2026 outlook

While tech-export industries surge, traditional sectors like textiles, petrochemicals, and steel are struggling due to weak global demand and overcapacity. 

The textile industry, which depends heavily on orders from Europe and North America, has faced a prolonged downturn throughout 2025. Global retailers have cut back on inventory and reduced the frequency of their purchases.

The petrochemical sector has been weighed down by an influx of supply from China and Middle Eastern producers. The global market for key petrochemical products, such as ethylene and plastics feedstocks, is overflowing due to China expanding its production capacity even while domestic demand slows.

The steel sector faces a similar problem, also driven primarily by China’s products flooding international markets at lower prices.

Growth forecasts for 2026 have so far been cautious due to concerns over the potential effects of U.S. tariffs on Taiwanese exports, despite the fact that semiconductors are exempted for now. 

Officials in Taiwan have said that they are attempting to negotiate a more favorable tariff agreement with the U.S. after they were hit with a 20% tariff rate in July.