Taiwan's National Statistics office reported on Friday that the country's gross domestic product (GDP) expanded by 14.36 percent year-on-year in the third quarter of 2024. Bloomberg noted this marks the fourth consecutive quarter of double-digit growth — a streak not seen in nearly 39 years.
What's behind the surge?
The statistical office and Bloomberg attribute the exceptional performance largely to global demand for artificial intelligence (AI) hardware. Taiwan's export-oriented technology sector, which includes key suppliers to companies such as Nvidia and Apple, has benefited strongly from AI-driven orders.
Breakdown of the components
- Exports rose about 61 percent in September, surpassing a record level and exceeding $87 billion.
- Gross fixed capital formation (investment) jumped more than 26 percent, reaching a five-year high.
- Household consumption growth remained above 5 percent.
- As a result, domestic demand contributed over 9 percentage points to quarterly growth, while net exports added nearly 5 percentage points.
Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, reported robust results: net profit for July–September increased by 69 percent, and the company issued revenue guidance for the fourth quarter that beat expectations.
Budgetary and monetary implications
The rapid expansion has increased fiscal headroom. The Taiwanese government has proposed a record 2027 budget of NT$3,930 billion (about $120 billion), which would allocate more resources to priority areas, including defense. Under the proposal, total military spending would exceed 3 percent of GDP.
On monetary policy, the strong performance may allow the central bank more room to focus on curbing inflation. After leaving its policy rate unchanged for ten consecutive quarters, the Taiwan central bank faces revised market expectations: Goldman Sachs analysts recently adjusted their forecast and now expect a new rate-hiking cycle to begin in December 2026.
Why it matters
Taiwan's results are a key barometer for the global technology supply chain, particularly demand for AI hardware. The combination of export strength and rising domestic investment indicates the economy's gains are broadening, which has implications for fiscal planning and monetary policy.
This article was prepared with assistance from an AI tool; the final content was edited and verified by our journalist.
