Taiwan: AI boom sustains exceptional growth – Commerzbank

Commerzbank’s Dr. Henry Hao and Charlie Lay underscore that Taiwan’s industrial production and exports are surging on AI and high-performance computing demand. July manufacturing output and export orders point to Q3 GDP growth around 12–12.5% year-on-year, after 12.9% in Q2. Despite stellar growth, inflation near 2.1% keeps the CBC comfortable holding its policy rate at 2%.

AI-driven strength with steady policy

"Taiwan’s industrial production remained strong in July, rising 25.6% yoy (Bloomberg consensus: 20.7%) vs 22.6% in June. Manufacturing output increased 26.9% yoy vs 24% previously."

"The strength was once again led by the technology sector, with output of computers, electronics and optical products surging 95.6% yoy, while electronic components rose 22.7%. Importantly, the improvement was not confined to technology, with machinery output rising 19.8% and basic metals 13.2%, although chemicals and autos remained weak."

"The Ministry of Economic Affairs expects manufacturing growth to remain very strong at 25.5-28.9% yoy in August, supported by AI, high-performance computing and the traditional peak season for electronics."

"The latest data point to further upside risk to already exceptionally strong GDP growth. Q2 GDP expanded 12.9% yoy, and the government recently raised its 2026 growth forecast sharply to 11.05%, reflecting booming AI-related exports and investment."

"July exports rose 32.9% yoy and export orders surged 61.9% yoy, pointing to continued strong external demand at the start of Q3. Together with the latest production data, which suggests Q3 growth could remain around 12.0-12.5% yoy. The economy expanded by 14.2% in H1 2026."