Taiwan's economy, heavily reliant on international trade, is forecasted to grow at a faster pace in 2024, driven by high global demand for artificial intelligence (AI) applications and robust domestic consumption, according to the statistics office.
As a vital link in the global technology supply chain, Taiwan supports major companies such as Apple Inc and Nvidia and hosts the world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
The Directorate General of Budget, Accounting, and Statistics has revised Taiwan's gross domestic product (GDP) forecast for this year, now expecting a 3.94% increase over last year, up from the 3.43% forecast issued in February. "The higher forecast is mainly due to substantial exports," the agency stated. "The key factor is AI, which is developing very fast."
From January to April, exports of electronic components, information and telecommunications, and video and audio products reached $95.1 billion, marking a 25.1% year-on-year increase. Exports in April rose for the sixth consecutive month and are expected to gain more momentum in the traditionally strong second half of the year. This trend is promising for Taiwan's trade-driven economic growth amid booming demand.
The statistics agency now forecasts 2024 exports to grow by 10.06% compared to last year, up from the earlier prediction of 6.14%. This contrasts sharply with 2023, when exports dropped by 9.8% year-on-year.
"The robust global semiconductor cycle is positive for Taiwan's trade outlook," stated a recent ANZ report. "Local consumption is equity-linked. The strong performance of the stock market generates a positive wealth effect and supports retail sales."
Additionally, the agency has adjusted the 2024 consumer price index (CPI) forecast from 1.85% to 2.07%, slightly above the central bank's 2% target. "Lower inflation allows the central bank to maintain rates through 2024," the ANZ report noted.
The central bank's next rate-setting meeting is scheduled for June, following an unexpected benchmark rate increase in March due to inflation concerns. In the first quarter, Taiwan's economy expanded by 6.56% year-on-year, slightly higher than the preliminary 6.51% reading, marking its fastest quarterly growth since the second quarter of 2021.
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