Taiwan: AI boom sustains exceptional growth – Commerzbank

Taiwan's economy continues to thrive, driven by the insatiable demand for artificial intelligence and high-performance computing. Dr. Henry Hao and Charlie Lay from Commerzbank highlight that July manufacturing output and export orders indicate a potential Q3 GDP growth of 12-12.5% year-on-year, following a 12.9% expansion in Q2.

This remarkable growth, however, is tempered by inflation hovering around 2.1%, enabling the Central Bank of China to maintain its policy rate at 2%. Despite this, Taiwan's industrial production showed resilience, surging by 25.6% year-on-year in July, up from 22.6% in June. The technology sector, in particular, drove this surge, with the production of computers, electronics, and optical products skyrocketing by 95.6% year-on-year, while electronic components rose by 22.7%.

The improvement was not limited to the tech industry; machinery output increased by 19.8% and basic metals rose by 13.2%, albeit chemicals and auto sectors remained subdued. Economic experts project that manufacturing growth will maintain its strong pace of 25.5-28.9% year-on-year in August, propelled by AI, high-performance computing, and the traditional electronics peak season.

The latest economic data suggests further upside potential for Taiwan's GDP growth, which already expanded by 12.9% year-on-year in Q2. The government has also revised its 2026 growth forecast upwards to 11.05%, buoyed by soaring AI-related exports and investment. July's exports grew by 32.9% year-on-year, while export orders surged by 61.9% year-on-year, signaling robust external demand at the beginning of Q3.

These production figures, coupled with robust growth in H1 2026, suggest that Taiwan's economy may continue to expand by 12-12.5% year-on-year in Q3.