Taiwan Trims 2025 GDP Growth Forecast

Source Credit : Reuters

Taiwan's trade-dependent economy is projected to experience slower growth in 2025 than previously anticipated, primarily due to uncertainties surrounding potential U.S. tariffs, according to a report released by the statistics agency on Wednesday.

Taiwan, a leading semiconductor powerhouse with a significant trade surplus with the United States, was confronted with a 32% tariff on its imports to the U.S. However, this situation was temporarily alleviated when President Donald Trump announced a 90-day pause on these tariffs to facilitate negotiations.

Taiwan's gross domestic product (GDP) is now projected to grow by 3.1% this year, according to the latest forecast from the Directorate General of Budget, Accounting and Statistics. This estimate reflects a slight adjustment from the previous forecast of 3.14% made in February.

One main uncertainty is "the outcome of U.S. trade tariff negotiations with various countries that can have a far-reaching impact on the global economy, inflation, and supply chains," it said in a statement. It also said that weak growth in consumption and domestic investments could contribute to slowing growth.

In April, the statistics agency unexpectedly said it would raise its full-year growth forecast to 3.6% on strong tech demand.

Taiwan serves as a pivotal hub in the global technology supply chain for leading companies such as Apple and Nvidia. It is also home to the world's largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC). This strategic position underscores Taiwan's critical role in the advancement of technology and innovation on a global scale.

The United States is Taiwan's second-biggest export destination after China. Taiwan's exports this year are expected to grow by 8.99%, the agency said, upgrading a previous forecast of 7.08%.

GDP expanded by 5.48% in the first quarter, the statistics agency said, compared to a preliminary reading of 5.37%, and was the fastest rate of growth since the first quarter of 2024 when the economy expanded 6.64%.

The forecast for the consumer price index (CPI) was lowered to 1.88% from 1.94% previously.