UBS Raises Taiwan's 2026 Economic Growth Forecast to 11%, Fastest Expansion in Nearly 40 Years

UBS's latest Asia-Pacific Economic Outlook report indicates that, thanks to sustained strong export momentum, expanding corporate capital expenditure, and the gradually emerging spillover effects from artificial intelligence (AI)-related demand, the bank has raised its GDP growth forecast for Taiwan in 2026 from the previous 9.9% to 11%. If this forecast materializes, it would mark Taiwan's fastest economic growth since 1987, demonstrating strong macroeconomic resilience.

Deng Weishen, Senior Asia and China Economist at UBS Investment Bank, stated that Taiwan's export momentum continues to outperform expectations, with the upward trend in corporate capital expenditure further extending. The team led by Premier Cho Jung-tai, in coordination with the Ministry of Economic Affairs, the Development Council, and other agencies, continues to monitor industrial development, and Cho has emphasized the importance of policies in supporting economic stability. UBS expects the upcoming Q2 GDP year-on-year growth rate to remain above 10%. Even with a higher base in the second half, sustained economic momentum is expected to drive full-year GDP growth into double digits.

Deng noted that Taiwan's Q2 exports accelerated further from Q1 despite already being at a high level, and the momentum has remained strong since July. He expects this trend to continue in the second half, although individual months may experience fluctuations. Meanwhile, imports of capital goods have recently hit record highs, indicating that corporate investment demand remains robust, with no clear signs of slowdown in the short term. Taiwan's stock and over-the-counter markets have seen active trading, driven by tech stocks such as TSMC (2330-TW), reflecting strong market confidence in the future economic outlook.

Deng also observed increasing signs of the AI technology boom spreading into non-tech sectors. On the production side, traditional industries such as metals and machinery are showing signs of cyclical improvement. On the consumption side, retail sales growth has further accelerated after adjusting for fuel spending and inflation, pushing overall retail sales growth to a multi-year high. UBS believes the recent improvement in consumption likely reflects household income growth and wealth effects driven by the AI boom, allowing ordinary citizens to tangibly benefit from economic expansion.