Taipei, Sept. 15 (CNA) Cathay Financial Holding Co. announced Monday it has sharply raised its forecast for Taiwan’s 2025 economic growth to 4.5 percent from 2.8 percent projected in June, citing stronger-than-expected exports fueled by front-loaded orders ahead of tariff exemptions and sustained AI-driven demand.
Cathay Financial presented its latest forecast at its third-quarter economic and financial outlook forum, attended by its Chief Investment Officer Cheng Shu-fen (程淑芬) alongside Ho Keng-yu (何耕宇) and Hsu Chih-chiang (徐之強), managers of the National Taiwan University industry-academic cooperation project sponsored by the company.
Hsu said AI’s boom outweighed uncertainty stemming from U.S. President Donald Trump’s policies, boosting Taiwan’s exports and justifying the upward revision.
However, he cautioned that private consumption remains weak, particularly in durable goods purchases. A universal NT$10,000 (US$330.72) cash handout, if implemented, could help spur spending in the fourth quarter this year or early next year, he noted.
Looking ahead, Hsu said growth in 2026 is projected to slow to 2 percent as negative tariff effects emerge and the high comparison base from this year weighs on momentum.
The team also adjusted Taiwan’s 2025 consumer price index (CPI) growth forecast slightly down to 1.8 percent from 1.9 percent, citing softer inflation in dining out and rents alongside low oil prices.
For 2026, inflation is expected to ease further to 1.6 percent as slowing domestic demand tempers pressures from utility and service costs, according to the team.
On monetary policy, Hsu said Taiwan’s central bank is unlikely to cut rates this year given solid growth above 4 percent and inflation below 2 percent, despite market expectations of two to three U.S. Federal Reserve rate cuts by year-end.
Any easing by the central bank would depend on whether Taiwan records two consecutive quarters of negative growth next year, he added.