Taipei [Taiwan], November 29 (ANI): Soaring demand for artificial intelligence (AI) is boosting both exports and investment, prompting the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Friday to sharply revise up Taiwan's 2025 economic growth forecast to 7.37 per cent, Focus Taiwan reported.

The DGBAS's latest projection was 2.92 percentage points higher than its August forecast of 4.45 per cent, based on upward revisions to exports, imports, private consumption, and private investment for the full year, the news report noted on Friday.

If the forecast holds, it would mark Taiwan's highest growth in 15 years, second only to 2010's 10.25 per cent.

Despite such a high base, the DGBAS projected 2026 growth to be at a healthy rate of 3.54 per cent.

DGBAS Minister Chen Shu-tzu told reporters that the current economy is 'rising steadily.'

Tsai Yu-tai, head of the DGBAS's Department of Statistics, attributed the sharp upward revision mainly to global demand for AI-related goods, the news report said.

According to the DGBAS's latest forecast, merchandise exports are expected to reach USD 624.9 billion this year and USD 664.4 billion next year, up USD 35.7 billion and USD 62.3 billion, respectively, from previous projections.

Amid optimism over the AI boom, with major cloud service providers continuing to expand capital expenditures and boosting demand for Taiwan's chips, servers, and components, Taiwan's economic growth for 2026 is projected at 3.54 per cent, as the AI momentum is expected to continue, he said, as per the Focus Taiwan report.

He added that the 3.54 per cent growth forecast for 2026 was 'conservative,' taking into account potential U.S. tariffs or other trade restrictions on semiconductors under the United States' ongoing Section 232 investigation.

For the 2025 forecast, the DGBAS expected that the NT$10,000 (US$317) cash handout to residents, which began earlier this month, would boost domestic consumption, while reductions in commodity taxes are likely to stimulate car sales.

As a result, private consumption is projected to grow 1.5 per cent in real terms for the year, an upward revision of 0.65 percentage points from the previous forecast, the DGBAS said, as per the Focus Taiwan report.

Tsai said that over 15 million people have received the cash handout so far, with its impact expected mainly in Q4 this year -- contributing about one percentage point to the projected 7.91 per cent economic growth for the quarter -- and in Q1 next year.

Amid concerns over traditional industries, Tsai said that China's efforts to curb excessive competition could help ease pressures, which may in turn reduce the negative impact on Taiwan's supply chains and exports in affected sectors.

Li Chen-yu, chief economist at Taishin Shin Kong Financial, said that the DGBAS's upward revision was expected, adding that the company had internally raised its growth forecast above 7 per cent early this November.

The DGBAS's earlier forecast was relatively conservative because it expected this year's economic growth to be affected by US tariffs; even in August, they projected growth at 4.45 per cent, factoring in early shipments, Li said.

Sun Ming-te, director of the Taiwan Institute of Economic Research's Macroeconomic Forecasting Center, said he was 'not surprised' by the DGBAS's higher projection, citing strong AI sales as the main driver.

Sun also said that the 2026 forecast 'would not be overly optimistic,' as he expected next year's domestic demand to exceed this year's. It would be supported by Taiwan's moderate easing since September and US Fed rate cuts, which should boost consumption and economic momentum, he said.

However, he cautioned that several uncertainties remain, including shifts in US President Donald Trump's policies, potential overheating in the AI investment boom, and possible new tariffs that could be imposed under the Section 232 investigation, the Focus Taiwan news report concluded. (ANI)