APAC Economic Perspectives: Taiwan: double-digit GDP growth

Research evidence excerpt

APAC Economic Perspectives: Taiwan: double-digit GDP growth

. Recent developments point to increasing

signs of such positive spillover. On the production side, a cyclical upswing in the metal

and machinery sectors appears to be emerging (Figure 9). While shipments could still be

related to downstream AI demand, this still marks the first notable cyclical improvement

in the traditional non-tech sectors in several quarters. Critically, on the consumption

side, retail sales recorded sequential acceleration after adjusting for fuel spending and

inflation. This has also pushed headline retail sales growth to a multi-year high (Figure 11

&12). In our assessment, while the uptick at the beginning of the year likely reflected the

government economy-wide cash handout distributed from last November, the re-

acceleration over the past two months has a higher probability of reflecting household

income growth and wealth effects stemming from the AI boom.

AI-driven fiscal boom could be a channel facilitates tech-to-non-tech spillover

Importantly, we note an AI-driven government fiscal balance boost. The latest data has

shown a record government revenue upswing, with total tax revenue growing 82%

year-on-year in 1H26. Although the delayed payment arrangement has mechanically

pushed up the growth rate, it is also clear that total government revenue is growing with

unprecedented momentum amid strong corporate earnings driven by tech, robust

overall income growth, and securities transaction tax (Figure 14 & 15). Since the AI-

driven export boom, Taiwan has recorded fiscal surpluses in both 2024 and 2025. In fact,

Taiwan has been running fiscal surpluses in most of the past 10 years, given its unique

edge in the tech hardware industry. In our view, strong government fiscal position