Taiwan’s Surprising 6.5% GDP Growth Driven by AI Exports and Strong Consumer Spending
Taiwan’s economy has experienced a significant surge, with its GDP rising by 6.5% in the first quarter, surpassing expectations. The growth has been driven largely by exports of AI-related technologies such as semiconductors, which have seen a surge in demand due to the rise of ChatGPT and other artificial intelligence applications.
The pace of growth has exceeded economist predictions, with exports increasing by nearly 19% in March, driven by a massive increase in sales of AI-related hardware. Taiwan’s major chip manufacturers, such as TSMC, have become one of the world’s most valuable companies, with its market value almost reaching $720 billion.
In addition to the AI craze, strong consumer spending has further supported Taiwan’s economic growth in the first quarter of the year. Sectors like tourism, food and beverages, and the stock market have all experienced a rebound, contributing to the overall positive performance of the economy. Despite these challenges, economists caution that the pace may slow down throughout the rest of 2024, with projections indicating a 3.4% increase in GDP by year-end.
Recent warnings from major semiconductor companies like TSMC and Intel about potential slowdowns in demand have impacted market sentiment, with the Taiwan Stock Exchange closing lower on Tuesday. Traders are concerned that the AI rally may have peaked leading to a decline in value for New Taiwan dollar against US dollar. Despite these challenges Taiwan’s economy continues to show resilience amid changing global dynamics.
