Investing.com -- Taiwan's central bank has increased its growth forecast for this year, recognizing the significant role that local companies such as chipmaker TSMC are playing in the AI revolution.
However, the bank also warned of potential risks for next year due to the trade policies of the incoming Trump administration in the United States. In 2023, Taiwan's economy experienced its slowest growth rate in 14 years.
The central bank highlighted Taiwan's dependence on trade, suggesting that the island could be negatively affected by the import tariffs U.S. President-elect Donald Trump has pledged to impose after he takes office on Jan. 20.
Following its quarterly board meeting on Thursday, the central bank issued a statement in which it stated that uncertainty about U.S. trade policy had significantly increased. The bank recommended caution in anticipation of potential changes in the global trade landscape.
The bank expects Taiwan's economy to maintain its growth momentum into next year, driven by new technologies, including the ongoing AI boom, which is expected to continue boosting the island's exports.
However, the bank noted that its 2025 GDP outlook does not yet include the potential impact of changes in U.S. trade policy. Governor Yang Chin-long emphasized the uncertainty, stating that the trade policy of the new U.S. government is a significant variable for Taiwan's economic growth in the coming year.
The central bank revised its 2024 estimate for economic growth upward to 4.25%, an increase from its September forecast of 3.82%. It also predicts growth of 3.13% in 2025, a slight increase from its previous projection of 3.08%.
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