TAIPEI (Taiwan News) — The Taiwan Institute of Economic Research (TIER) forecast on Thursday (July 25) that Taiwan’s gross domestic product (GDP) would grow by 3.85% this year.

According to TIER’s economic report published Thursday, the business climate test score for the manufacturing industry in June was 98.45 points, a decrease of 2.15 points from the previous month, per CNA. The service and construction industry climate test score rose to 99.21 and 113.04 points, respectively, marking four consecutive months and three consecutive months of increases.

TIER Director Sun Ming-te (孫明德) said the think tank continues to hold an optimistic view of domestic and international economic conditions for this year. The consumer price index (CPI) is expected to rise by 2.13%, unchanged from the previous prediction, he added.

Sun said the domestic job market remains stable. The wealth effect driven by the stock market this year has helped sustain private consumption momentum, the director said.

Regarding investment, Sun said Taiwan is benefiting from the global AI boom, with domestic semiconductor manufacturers expanding advanced processes and high-end packaging capacities. Moreover, companies in the manufacturing sector remain optimistic about future economic prospects.

In terms of foreign trade, Sun said although the recovery speed of individual industries in the first half of the year was inconsistent, the growth rate of exports of goods has turned from negative to positive recently, per UDN. 

On the domestic demand side, Sun explained that the service industry benefited from the stock market repeatedly hitting new highs in June, along with increased freight rates due to a shortage of ships, containers, and port congestion.