Taiwan’s Economy Grows the Most in a Year on Front-Loading, AI

A technology store in Taipei. Photo by Annabelle Chih /Photographer: Annabelle Chih/Get

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(Bloomberg) — Taiwan’s economy grew at the fastest pace in a year, fueled by a surge in exports as companies rushed shipments to avoid US tariffs and demand for AI-related hardware.

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Gross domestic product expanded 5.4% from a year earlier in the first quarter, according to a statement by the statistics bureau in Taipei on Wednesday. That was significantly higher than the 3.6% growth estimated by economists surveyed by Bloomberg. 

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While growth will likely slow as levies bite, the bureau upgraded its forecast to 3.6% expansion this year, from a previous estimate of 3.1%. The projection, however, doesn’t factor in tariffs announced since US President Donald Trump returned to the White House.

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Taiwan’s export-oriented economy has benefited from a surge in global demand for its high-tech products underpinning AI development in recent years. Exports from the island in March rose to a record $49.6 billion, with shipments to the US and ASEAN countries also seeing new highs in that month.

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Exports of goods and services jumped 20.1% year over year, according to the advance estimates, while imports rose 23.7%. 

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Front-loading in response to US tariff hikes and the gradual elimination of supply chain bottlenecks for high-end information technology products contributed to the economy’s growth, according to the bureau’s statement.

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On April 2, Trump announced sweeping “reciprocal tariffs” on almost all economies. Taiwan was slapped with a 32% levy, although the higher duty was later postponed for 90 days.

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The tariff threat has prompted economists and analysts to lower their estimates for Taiwan’s economic growth this year, with Morgan Stanley cutting its forecast to 2.2% from 3.4%. The Chung-Hua Institution for Economic Research, a semi-official think tank based in Taipei, even projected that growth could drop to 0.16% in the worst-case scenario.

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With uncertainty looming, Morgan Stanley analysts expect Taiwan’s central bank to begin its rate-cutting cycle as early as September.

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Taipei has pledged to reduce non-tariff trade barriers and said it would increase purchases of American energy, agricultural products and military goods. The island’s Premier Cho Jung-tai has said that trade talks are expected to take place in May.

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Earlier in April, Taiwan Semiconductor Manufacturing Co., Taiwan’s biggest company and the go-to supplier of the most advanced chips for Nvidia Corp. and Apple Inc., reported better-than-expected results for the first quarter. The firm continued to hold an optimistic outlook for growth this year despite the tariff risks.

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—With assistance from Miaojung Lin.

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(Updates with more details and context.)

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