TAIPEI (Taiwan News) – The economy will grow by 3.96% this year instead of by the 3.81% predicted earlier, the Chung-Hua Institution for Economic Research (CIER) said Friday (Oct. 25).

Next year, geopolitical risk and a flattening global economy could result in gross domestic product (GDP) growth of 3.03%, Radio Taiwan International (RTI) reported. The CIER named AI sector development as the main driver behind its optimistic outlook for this year.

Strong international demand for AI technology fueled Taiwan’s export and investment growth, followed by continued domestic growth. Domestic demand accounted for 1.5%, exports for 0.89%, and domestic investment for 0.77% of GDP, according to CIER.

The think tank said inflation was likely to decline, with the figure for 2024 dropping to 2.17% from the 2.49% recorded in 2023. Next year, the consumer price index (CPI) might fall below 2% for the first time in four years to end at 1.96%.