In the AI Boom, Taiwan Faces K-shaped Imbalance of 'Strong Industry, Weak Services': CDRI

(Central News Agency, Taipei, 5th) The Commerce Development Research Institute (CDRI) today released its latest forecast on the commercial service industry's business cycle, pointing out that the current economic recovery is not a comprehensive expansion. In terms of GDP growth and contribution, a situation of 'strong industry, weak services; booming export sector, sluggish domestic demand sector' has formed, revealing a dual economy and K-shaped development imbalance.

The CDRI stated that the preliminary estimate for the first-quarter economic growth rate reached 14.55%, a 48-year high for a single quarter. This is widely attributed to robust exports driven by strong demand for AI and high-performance computing.

However, the CDRI analysis shows that among the five sub-indicators of the coincident index series, only 'GDP of Wholesale and Retail Trade' stands out. The cyclical indices for 'Real Consumption of Housing, Water, Electricity, Gas, and Other Fuels', 'Real GDP of Accommodation and Food Services', 'Real GDP of Real Estate and Residential Services', and 'Number of Employees in Services' are all declining.

The CDRI stated that the indicators show the current recovery is not comprehensive. In terms of GDP growth and contribution, it has formed a situation of 'strong industry, weak services; booming export sector, sluggish domestic demand sector', exhibiting a dual economy and K-shaped development imbalance.

Furthermore, there are not only gaps between industry and services but also development differences within the service sector between domestic and foreign demand and among different industries, showing market fragmentation and structural divergence.

The CDRI pointed out that Taiwan has ascended to a core hub in the 'AI boom', but traditional small and medium-sized enterprises can see but cannot access the dividends of digital, green, and AI transformation.

The CDRI stated that the biggest characteristic of the current service industry climate is the 'normalization of uneven recovery'. It suggests working on both the supply and demand sides simultaneously to help relevant businesses and investors adapt to the new market environment and competitive changes, allowing the benefits from adjusting resources and investment layouts to be realized smoothly. (Editor: Lin Shuyuan)