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Taiwan’s economy grew at an annual rate of 8.6% last year, its fastest pace in 15 years, with its export-oriented industries boosted by a boom in artificial intelligence and a surge in exports to the United States.
Estimates released by Taiwan’s Bureau of Statistics on Friday were far better than economists’ forecasts. This is the strongest growth rate since 2010.
Taiwan reached a trade deal with U.S. President Donald Trump’s administration earlier this month. It lowered U.S. import tariffs on Taiwan from 20% to 15% in exchange for a U.S. commitment to invest at least $250 billion in areas such as semiconductors and artificial intelligence. Economists say this could lead to an increase in exports, further boosting the economy this year.
“We expect AI-related demand to continue supporting Taiwan’s export performance through 2026, supporting overall economic growth as global AI investment continues to grow,” Bank of America economists Xiaoqing Pi and Helen Qiao wrote in a recent report.
Taiwan is a major manufacturer of artificial intelligence servers, computer chips and precision instruments. Last year, its exports grew nearly 35% year-on-year, driven by technology-related shipments. Shipments to the United States surged 78%.
The boom in artificial intelligence has also driven Taiwan’s leading technology companies to record profits and revenue. Taiwan Semiconductor Manufacturing Co., Ltd. is the world’s largest contract chip manufacturer, and Nvidia is its main customer. It is also one of the world’s largest companies by market capitalization and an electronics giant. Foxconnwhich makes artificial intelligence servers for Nvidia and assembles products for Apple.
However, economists say growth is likely to slow this year because it is built off a high base.
Deutsche Bank Taiwan’s economy is expected to grow by 4.8% in 2026. Given Taiwan’s reliance on technology exports, there are growing concerns that the AI boom may be nothing more than a bubble, a major risk.
Uncertainty about U.S. tariffs under Trump is another concern. So are the tensions with Beijing. China Claims Taiwan is an autonomous island with its own territory. In late December, China conducted large-scale military drills around Taiwan, rekindling concerns that Beijing might impose blockades or seizures.