The National Taiwan Academy of Economics released its latest economic forecast today. In 2025, Taiwan's economic growth will be supported by investment and consumption. External demand will return to the main force of economic growth. The recovery of emerging technology applications and electronic terminal products will continue to support export performance. Traditional industries are also expected to take over information and communication products. Given that investment and external demand performed better than previously expected, the domestic economic growth rate in 2025 is forecast to be 3.42%, which is significantly revised up by 0.27 percentage points from the forecast in November last year.
Although inflation is expected to slow down, climate change and labor shortages are suppressing the rate of inflation cooling. In addition, water and electricity prices are about to move. The National Taiwan Institute of Economics has simultaneously revised the annual CPI growth rate this year to 1.95%, an increase of 0.08 percentage points.
The Taiwan Economic Academy pointed out that the short-term outlook for the global economy is stable, but uncertainties still exist. U.S. economic performance is expected to slow slightly in 2025, but will remain solid, mainly due to fiscal support and productivity improvements brought about by generative AI. European economic momentum has improved compared with 2024, but is still weak. Although falling inflation and interest rates will help boost private consumption, weak export and investment growth will offset part of the impact. Mainland China's economic growth may be constrained by the impact of U.S. tariffs and uncertainty about the effectiveness of stimulus policies.
Since the second half of 2023, Taiwan's exports have been driven by financial communications products, reflecting the strong momentum of emerging technology demand. Although the base period is already high, the recent annual growth rate of exports of information and communication products has maintained double-digit growth, indicating that AI-related demand continues to be strong. However, traditional industries have relatively insufficient growth momentum due to weak terminal demand and price-cutting competition due to China's overproduction. As China implements stimulus economic policies and production reduction measures, some industrial economic indicators have improved, but the effectiveness of the policies still needs to be observed in the future. Overall, as major economies enter a cycle of interest rate cuts, terminal demand is expected to rebound, driving global trade growth in 2025.
The Taiwan Academy of Economics believes that the expansion of emerging technology applications and the recovery of electronic terminal products will continue to support export performance. Traditional industries are expected to take over information and communication products, helping the steady growth of Taiwan's foreign trade. The estimated growth rates of export and import amounts in 2025 are 6.49% and 6.96%. %, revised up 0.79 and 0.43 percentage points respectively from the previous forecast. The output and input growth rates in 2025 are estimated to be 6.05% and 6.27% respectively, revised up 1.37 and 1.00 percentage points respectively from the previous forecast.
In terms of fixed capital formation, benefiting from the continued strong demand for emerging technologies, the purchase demand for semiconductor equipment has increased significantly since the second half of 2024. The import value of electromechanical equipment currently maintains a high annual growth rate, and leading domestic chip manufacturers have increased capital expenditures. scale, manufacturers are accelerating net-zero transformation investment and attracting major international companies to continue to increase investment in Taiwan. The overall fixed capital formation growth rate is estimated to be 5.95% in 2025, which is revised up by 1.02 percentage points from the previous forecast; of which the private investment growth rate It was 5.66%, an increase of 0.86 percentage points from the previous forecast.
In terms of domestic demand, the annual growth rate of retail and catering sales still maintains a stable growth trend. However, as the comparison base period has increased, the recent annual growth rate performance is not as impressive as before. There are still significant differences in wage levels and growth rates in some industries. However, the overall job market performance is stable and the unemployment rate is still low. This stable trend is expected to continue. Private consumption will still receive strong support, but its contribution to economic growth may be slightly lower. In 2024, the private consumption growth rate in 2025 is forecast to be 2.11%, which is revised down by 0.15 percentage points from the previous forecast.
In terms of prices, global inflationary pressure continues to ease, and domestic inflation also shows a slow downward trend. However, uncertainties such as climate change, job shortages, and geopolitical risks still exist, which are expected to limit the rate of inflation cooling. The CPI growth rate is predicted to be 1.95% in 2025, which is revised up by 0.08 percentage points from the previous forecast.
In terms of future uncertainties, looking forward to 2025, the global economy will still face many challenges, among which the most important ones are Trump’s new policy in the United States, the future direction of monetary policies of various central banks, the effectiveness of China’s economic stimulus policies, and whether domestic investment momentum can be sustained. The key is that it not only affects Taiwan's export performance, but also affects Taiwan's domestic demand and consumption through the financial market and import prices. It deserves pre-determination and attention.
