BIG SURGE: Taiwan, the only economy projected to post double-digit percentage growth this year, and South Korea account for 62% of net trade in AI-related computing hardware
Staff writer, with CNA, Washington
The IMF has sharply raised its forecast for Taiwan’s GDP growth to 10.7 percent this year, the highest projected rate in the Asia-Pacific region, amid the ongoing artificial intelligence (AI) boom.
In its latest World Economic Outlook report released yesterday at its annual meetings in Bangkok, the IMF raised its forecast for Taiwan’s growth from the 5.2 percent it projected in April, making Taiwan the only economy in the world projected to post double-digit percentage growth this year.
Taiwan’s projected growth far outpaces that of neighbors in the Asia-Pacific region, including Japan at 0.7 percent, South Korea at 3.3 percent, Singapore at 5 percent and Hong Kong at 3.8 percent, the report says.
The Taipei skyline is pictured on Sept. 22.
Photo: Ann Wang, Reuters
China’s economy is expected to grow 4.5 percent this year, while the US is forecast to grow 2.3 percent, the report said.
Despite the significant upgrade, the IMF’s latest forecast remains below the 11.05 percent growth projection released by the Directorate-General of Budget, Accounting and Statistics in August.
Global AI development has remained highly concentrated, both upstream, in the computing hardware required for AI training and inference, and downstream, in developing and operating frontier AI models, the IMF said.
Upstream, only a few economies produce advanced semiconductors on a large scale, it said, adding that Taiwan and South Korea account for 62 percent of net trade in AI-related computing hardware.
“Given the structure of supply chains for technology exports from these two economies, a handful of commodity exporters and other manufacturing hubs in East Asia are likely to see spillovers from this activity,” the IMF said.
Reflecting the nation’s robust export performance, the IMF projected Taiwan’s current account surplus would reach 22 percent of GDP this year, among the highest of any major economy.
The IMF also forecast Taiwan’s consumer price index would rise 2 percent this year, up from its April estimate of 1.5 percent, while the unemployment rate was projected to remain largely unchanged at 3.4 percent.
The IMF raised its global growth forecast by 0.1 percentage points to 3.1 percent for this year, compared with 3.5 percent growth last year.
“Two major transformative forces — geopolitics and technology — are reshaping the global economy, with their short-term impact gradually coming into view and their longer-term impact still largely unknown,” the IMF said in the report.
However, “technology is most recently playing out as a positive demand shock powered by investment in AI and related hardware and infrastructure,” the IMF said. “Trade flows show this most strikingly.”
While many advanced economies have been buoyed by rising investment in AI technology, poorer countries that are not benefiting from that boom face stark choices as they deal with high energy prices caused by the Iran war, it said.
“The global economy has been resilient, but that resilience is under strain, with risks tilted to the downside,” IMF chief economist Silvana Tenreyro told journalists in Bangkok.
The US’ war on Iran, launched in February, has plunged the Middle East into violence and seen global energy prices skyrocket as a result of Tehran’s retaliation.
The IMF report detailed that the twin economic forces of the war in Iran and the AI technology boom had created a “fragmented” world economy.
“Headwinds from a prolonged war and persistent geopolitical tensions could revive inflationary pressures, strain fiscal and external positions, and hit energy-importing and low-income countries hardest,” it said.
“At the same time, the current technology tailwind could stop abruptly if expectations about AI-related profits and productivity gains are reassessed, weakening investment and tightening financial conditions,” the IMF report said.
Additional reporting by AFP