By Jeanny Kao and Faith Hung
TAIPEI (Reuters) - Taiwan unexpectedly raised its 2025 economic growth forecast on Wednesday after a strong first quarter performance thanks to an export surge on strong tech demand ahead of the introduction of possible U.S. import tariffs.
Taiwan is a key hub in the global technology supply chain for companies such as Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), and home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC),.
After reporting a preliminary 5.37% on-year gross domestic product (GDP) expansion, the fastest rate since the 6.64% in the first quarter of 2024, the statistics agency hiked to 3.6% its full year growth forecast, from a previous 3.14%.
Production, exports and investment all performed well in the first quarter, with AI-driven demand helping, so with growth exceeding expectations the full year forecast has been raised, the Directorate General of Budget, Accounting and Statistics said.
"First half expectations are revised up, but there are more uncertainties for the second half," bureau official Wang Tsui-hua told reporters.
The first quarter performance beat the 3.4% growth forecast by analysts in a Reuters poll and was faster than growth of 2.9% in the fourth quarter.
"Although Trump’s tariffs pose a downside threat to the economy, we expect growth to remain strong, helped by continued rapid growth in information and communication technology exports," Capital Economics said in a research report.
The continued strong growth of the economy reinforces the view that Taiwan’s central bank will be one of the few in Asia to leave interest rates unchanged over the coming year, it added.
Quarter-on-quarter, the economy grew at a seasonally adjusted annualised rate of 9.67%.
U.S. President Donald Trump earlier this month paused plans for sweeping import charges on all countries for 90 days to allow negotiations to take place.
Taiwan’s tech firms have reported roaring demand thanks to the surge in interest in AI applications.
TSMC this month reported a 60% year-on-year surge in first-quarter net profit, beating forecasts.
China’s first-quarter economic growth outstripped expectations, underpinned by solid consumption and industrial output.
The United States is Taiwan’s second-biggest export destination after China.
Taiwan’s statistics agency will provide revised figures in a few weeks time, with more details and forward-looking forecasts.