Fitch Solutions has lowered its 2025 real GDP growth forecast for Taiwan from 3.3% to 2.8%, citing persistent global headwinds and the risk of renewed U.S. trade protectionism. A potential tariff hike on Taiwanese semiconductor exports—Taiwan’s top export category—remains a key downside risk, though strong profit margins and demand for advanced chips are expected to cushion the immediate impact.
Despite a more moderate growth outlook, Taiwan’s fiscal and monetary fundamentals remain stable. Inflation is projected to ease to 1.7%, allowing the Central Bank to maintain its key policy rate at 2.00% throughout the year. The current account surplus is expected to narrow slightly to 13.6% of GDP, reflecting softer global demand.
Geopolitical uncertainty remains a concern, particularly in light of U.S.-China tensions and Taiwan's reliance on both economies. Political gridlock in Taiwan’s legislature could also slow reform efforts and complicate trade negotiations. Nonetheless, Taiwan’s advanced manufacturing capabilities—especially in semiconductors—continue to position the island as a resilient and attractive investment destination in Asia.
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