Academia Sinica's Economic Research Institute Raises Economic Growth Forecast to 10.16%, Highest Among Domestic Think Tanks

(Central News Agency reporter Pan Tzu-yu, Taipei, 13th) Academia Sinica's Institute of Economics released its latest economic forecast today, significantly revising Taiwan's 2026 GDP growth rate upward to 10.16%, the most optimistic projection among domestic think tanks and the first to surpass the 10% threshold. Lin Chang-ching, a jointly appointed researcher at the institute, described Taiwan's economic outlook as 'the rising sun ascending further,' with AI serving as the main engine of growth, though he cautioned that uncertainties remain in the outlook.

The institute forecasts 2026 economic growth at 10.16%, a substantial upward revision of 6.45 percentage points from the 3.71% projected in December last year. Both external demand and domestic demand are contributing robustly, with domestic demand and net foreign demand contributing 5.03 and 5.13 percentage points to growth, respectively.

Lin emphasized that demand for AI hardware is not merely part of a typical business cycle but represents a major global investment in cloud infrastructure and high-speed computing capabilities, driving Taiwan's momentum within the global technology supply chain.

According to the institute's forecast, global demand for AI, high-performance computing, and cloud services is expected to continue in the second half of the year, sustaining strong exports of high-end chips, servers, and related components. As export production expands, imports of key components and intermediate inputs are also rising, supporting continued momentum in foreign trade. The institute projects real growth in merchandise and services exports and imports for 2026 at 23.02% and 21.91%, respectively.

Benefiting from companies expanding capacity and increasing capital expenditures in response to emerging technologies such as AI, and with major international firms increasing investments in Taiwan, growth momentum is expected to continue. The institute forecasts real private investment growth in 2026 at 9.79%.

In contrast to last year, when growth was primarily driven by external demand and domestic demand remained relatively flat, this year has seen robust investment and rising private consumption. The institute estimates real private consumption growth for 2026 at 3.60%.

Lin highlighted two key drivers of private consumption: first, the stock market repeatedly hitting new highs, boosting the wealth effect; and second, the sustained popularity of overseas travel.

While the stock market has surged on AI-related themes, Lin cited German securities expert André Kostolany's 'dog-walking theory,' which likens the relationship between the stock market and the overall economy to a person walking a dog—over the long term, stock prices will revert to fundamentals. He cautioned that while the current rise in Taiwan's stock market is supported by fundamentals, 'people can participate in the growth, but should not excessively leverage.'

Government agencies and domestic think tanks have successively raised their economic growth forecasts, but uncertainties remain. The institute noted that global AI investment has become a key force driving a new wave of technological industry development. However, future progress depends on the scale of capital spending, the realization of corporate profit models, and infrastructure bottlenecks. If financial leverage among AI-related firms continues to expand, it could amplify volatility in international financial markets.

Lin added that while concerns exist about a potential slowdown in AI capital expenditure affecting Taiwan's growth momentum, 'the likelihood of this happening this year is not high—it may occur next year or the year after.' He also stressed the need for early planning and assessment of follow-up challenges such as productivity gaps, power supply, cybersecurity, and talent shortages arising from the AI boom.

Other uncertainties include geopolitical risks and climate change, which may continue to affect commodity prices; global inflation remains uncertain; and the pace of monetary policy adjustments by major economies and the future direction of U.S. tariff policy will influence financial markets, exchange rates, and the global trade environment. (Edited by Chang Liang-chih) 1150713