DBS Bank (Taiwan), part of Singapore's DBS Group (SGX: D05), kept its forecast for Taiwan's 2026 economic growth at 11.6%, saying spending on artificial intelligence continues to lift exports and investment, Taiwan Times reported on October 20. The bank left its 2027 projection unchanged at 5.6% and expects consumer price inflation of 2% this year and 2.1% next year.
Ma Tieying, a senior economist at DBS Group, said high-frequency data put third-quarter GDP growth at about 12%. That compares with 12.9% in the second quarter and a peak of 15.4% in the first. She expects growth to ease to the high single digits in the final quarter. Large cloud providers face cash flow pressure, and higher interest rates are raising the cost of investment. Ma said this could push AI-led growth from rapid expansion into a more mature stage, with big technology firms relying more on bond issuance and outside funding.
Ma said Taiwan's chipmakers would remain hard to replace in the near term because of their advanced process technology, complete supply chain and long-standing client ties. China is moving quickly on AI models and infrastructure, she said, but still faces bottlenecks in semiconductor supply.
Gains on the local stock market, better profits in the financial sector and faster wage growth are supporting household spending, she added.
Third-quarter inflation reached 2.4%, up from 1.2% in the first quarter and 2.2% in the second. Ma named energy prices and US tariffs as the two main risks to the economy. State-run CPC Corporation and Taiwan Power are absorbing part of the energy costs. Ma said electricity prices could still rise after a review in December. She added that US tariff measures, including Section 232 duties on semiconductors, could move faster after the November midterm elections.
Chen Yu-chia, a senior vice president at DBS Bank (Taiwan), said the bank expects the US Federal Reserve to raise rates by 25 basis points in both December and the first quarter of 2027. That would take the federal funds rate to 4.5%.
DBS set a year-end gold target of $4,800 per ounce and sees prices reaching $5,200 to $5,300 in the first quarter of next year. Chen recommended that investors hold 5% to 10% of their portfolios in gold.