S&P Global Ratings Taiwan Ups 2026 GDP Growth Forecast to 8.2%, Cites 7 Major Risks

Taipei, July 9 (CNA) S&P Global Ratings Taiwan previously forecast Taiwan's economic growth rate for this year at 6.3%. However, considering the rapid growth in global IT spending that continues to drive the development of Taiwan's technology industry, with no signs of cooling in the second half of the year, the forecast for Taiwan's economic growth rate has been revised upwards to 8.2%. Nevertheless, businesses still face 7 major risks.

S&P Global Ratings Taiwan, a subsidiary of S&P Global Ratings, held a press conference today for its "Taiwan Mid-Year Credit Outlook 2026".

Tsai Yi-chun, Associate Director of S&P Global Ratings Taiwan's Financial Services Ratings, stated that benefiting from the steady contributions of exports and domestic demand, Taiwan's Gross Domestic Product (GDP) growth rate has exceeded market expectations. Strong artificial intelligence (AI) related demand is the main driver of economic growth. However, export performance in non-tech industries has been weaker and the gap with the tech industry is significant.

Regarding Taiwan's major economic indicators forecast, Tsai Yi-chun explained that S&P has revised Taiwan's economic growth rate upwards to 8.2% for this year, and forecasts 2.2% and 2.4% for next year and the year after, respectively. In terms of exchange rates, the New Taiwan Dollar (NTD) is expected to be 31.5 against the US Dollar this year, and will remain around 31 for the next three years.

As for inflation trends, S&P expects Taiwan's inflation rate to remain at 1.7% this year, 1.4% next year, and 2.4% the year after. The policy interest rate at the end of the year will remain at 2%, the same trend for the next three years. Chang Shu-ping, Senior Director of S&P Global Ratings Taiwan's Financial Services Ratings, added that compared to international levels, Taiwan's interest rate level is expected to be relatively stable.

In addition, S&P Global Ratings Taiwan has also listed 7 major risks that Taiwanese companies may face. Tsai Yi-chun explained that the first is the increasing contribution of exports driven by AI, which may bring new concerns. For example, if demand or returns are significantly reassessed, it could affect the stock prices of technology companies, leading to capital outflow, pressure on exchange rate stability, and reduced investor willingness to invest.

Secondly, regarding financing, Tsai Yi-chun said that potential escalation of conflict in the Strait of Hormuz could exacerbate market volatility. Furthermore, tight monetary policies adopted under inflationary pressures may lead to increased debt servicing costs. Third, concerning the Chinese economy, the sluggish real estate market and changes in trade flows pose pressure on market sentiment and economic growth. Fourth, regarding trade tariffs, although uncertainty has eased, risks remain, and potential spillover effects from energy and climate could further intensify market volatility.

Tsai Yi-chun pointed out that there are three additional structural risks to be aware of: multiple geopolitical tensions could complicate the macroeconomic environment; in terms of technology, AI-driven technological innovation exacerbates geopolitical fragmentation; and finally, climate change, with extreme weather and energy transition bringing operational challenges and rising costs. (Edited by Yang Lan-hsuan) 0709)