(Feb 10): Bank of America Corp nearly doubled its prediction for Taiwan’s economic growth this year, adding to a slew of upgrades even after a rip-roaring 2025 propelled by the AI buildout.
The firm lifted its projection to 8% from 4.5% on “relentless global demand” for the tech hardware that Taiwanese companies make, according to a note by analysts including Xiaoqing Pi dated Tuesday (Feb 10). Gross domestic product expanded 8.63% last year, the fastest pace since 2010.
The increase “reflects our sustained optimism over Taiwan’s technology‑driven expansion and is reinforced by several recent developments,” including a more stable currency, a trade and investment deal with the US, and spending by tech companies, BofA added.
Societe Generale SA also raised its 2026 growth call to 6.3% from 3%. Economist Michelle Lam wrote in a note that “another robust year for Taiwan’s tech‑led exports” was expected.
The financial institutions join Goldman Sachs Group Inc, Barclays plc and others in turning more optimistic on Taiwan even after its economy clocked one of the fastest rates of expansion globally last year. Officials in Taipei recently said growth in the fourth quarter came in at more than 12%, the quickest pace since 1987.
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Underscoring optimism that AI will continue to shine in 2026, Taiwan Semiconductor Manufacturing Co — Nvidia Corp’s main chipmaker — recently said it was earmarking as much as US$56 billion in capital spending, a projection that was stronger than anticipated. That figure comes as Alphabet Inc, Meta Platforms Inc, Amazon.com Inc and others step up spending on AI.
Also on Tuesday, TSMC reported a 37% rise in January revenue to NT$401.3 billion, above the 30% revenue growth the company expects for the full year.
BofA said it doesn’t expect Taiwan’s central bank to raise its policy rate in 2026, “given still‑subdued inflation, stagnant services wages, weak non‑tech sectors and continued cooling in the real‑estate market”.
See also: TSMC revenue jumps 37% in January as AI spending marches on
BofA and SocGen see a chance of tighter monetary policy next year after a pause in place since March 2024. Lam predicts two rate hikes of 12.5 basis points each in 2027, as part of what she called “a shallow tightening cycle”.
“There is scope for rates to drift higher over time, even if 2026 will likely remain steady,” she said. “Key risks to this outlook include potential Section 232 tariffs” — referring to a possible outcome of a national security investigation underway in the US — “and the bursting of the AI bubble.”
BofA also highlighted risks to its forecasts from issues such as “geopolitical dynamics”.
Taiwan sits at the centre of US-China tensions and Washington’s arms sales to Taipei anger Beijing. Such deals could imperil US President Donald Trump’s planned visit to Beijing in April to meet Chinese leader Xi Jinping, the Financial Times reported earlier, citing people familiar with the matter.
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