CIER Raises Taiwan's 2024 Economic Growth Forecast to 7.22%

The Chung-Hua Institution for Economic Research (CIER) today released its latest economic forecast. Despite disruptions from the Middle East conflict, strong demand driven by the booming AI technology is estimated to push this year's economic growth rate to 7.22%. However, inflationary pressure has slightly increased, with the annual Consumer Price Index (CPI) growth rate forecast at 1.98%, approaching the 2% inflation alert line.

CIER's previous economic forecast in January estimated economic growth rates for this year and next year at 4.14% and 2.95% respectively, with annual CPI growth rates of 1.64% and 1.58%. Today's latest forecast significantly revises up this year's annual economic growth rate to 7.22%, and estimates next year's at 3.4%. Affected by the Middle East conflict pushing up prices, this year's CPI annual growth rate forecast is revised up to 1.98%, and next year's to 1.83%.

CIER President Lien Hsien-ming explained that despite the disruptions from the Middle East conflict, the outlook for this year's economic growth rate remains positive, mainly due to Taiwan's robust exports. With the boost from AI product demand, the economic growth rate in the first quarter even exceeded 13%.

According to CIER's forecast, Taiwan's economic growth model is "hot externally, warm internally." For external demand, despite the Middle East conflict affecting goods trade and transportation, the booming AI industry is expected to lead to steady expansion in Taiwan's ICT, electronics, and semiconductor-related product imports and exports, with annual growth rates of 19.83% and 18.24% respectively.

For internal demand, private consumption is expected to see an annual growth rate of 2.16%, outperforming last year, due to improvements in the labor market and the wealth effect from the stock market.

Lien Hsien-ming added that CIER's economic forecast assumes scenarios based on international institutions' views, where the war will not last long and international oil prices will peak in April. However, the Middle East conflict involves energy and supply chain changes, which may further affect interest rates, and these uncertainties increase the difficulty of economic forecasting.

Regarding external concerns about inflation caused by the conflict, Lien Hsien-ming stated that the duration of the Middle East conflict, whether domestic energy prices continue to be frozen, and whether the government continues to control them, are key factors affecting future price trends.

Chen Mei-chu, Director of the National Development Council's Economic Development Department, stated that after the outbreak of the Middle East conflict, the government quickly launched multiple price stabilization measures, frequently holding meetings to monitor price changes. The Ministry of Economic Affairs even launched the "MOEA Plastic Bag Flat Price Project" due to fluctuations in the petrochemical raw material market, because "the biggest fear for prices is inflation expectations." The government has taken significant actions and strong measures, hoping to control from the source and curb inflation expectations.

Lien Hsien-ming frankly stated that the current price forecast is very close to 2%. If the government had not frozen prices, the annual CPI forecast would have exceeded 2%.

Regarding exchange rates, CIER considers that due to uncertain inflation in Europe and the US, variables in monetary policy direction, and geopolitical risks pushing up the US dollar, the New Taiwan Dollar is expected to gradually appreciate against the US Dollar in 2026, from 31.63 NTD in the first quarter to 31.04 NTD in the fourth quarter, with an annual average of approximately 31.4 NTD, a depreciation of about 0.65% compared to 2025. (Edited by Chang Chun-mao) 1150417