UOB’s Ho Woei Chen highlights Taiwan’s strong 1Q26 Gross Domestic Product (GDP) performance, driven by exports and improving domestic demand, and expects full-year 2026 growth to exceed 9%. Chen notes moderating but still manageable inflation, a slightly higher 2026 Consumer Price Index (CPI) forecast, and a stable 2.00% policy rate path, implying limited near-term changes for the Taiwan Dollar (TWD) and local rates.

Robust growth with stable policy outlook

"Looking ahead, demand associated with emerging technology applications should continue to support strong manufacturing performance and investment growth, though the high base effect will begin to moderate the headline growth rates."

"Given 1Q26 growth at 13.69% y/y, Taiwan’s GDP is likely to beat 2025’s full-year performance of 8.68%. Thus, we expect to lift our forecast for Taiwan’s 2026 GDP growth above 9% from previous 7.7%."

"Considering the elevated risks, we lift our forecast for 2026 headline inflation marginally higher to 2.0% from 1.9%, implying inflation is likely to average around 2.3% for the remainder of the year following the subdued 1.2% reading in 1Q26."

"The strength of the economy affords the CBC some policy flexibility should inflation pressures intensify more than expected."

"For now, we expect CBC to maintain its policy rate at 2% throughout this year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)