TAIPEI (Taiwan News) — Directorate General of Budget, Accounting, and Statistics revised Taiwan’s economic growth rate from 3.29% to 3.14% on Wednesday.

The agency said there were two reasons for this change. First, Taiwan’s base level last year was high at 4.59%, per UDN. Second, budget cuts by the Legislative Yuan have affected government investment and consumption, lowering GDP.

DGBAS Department of Statistics Director-General Tsai Yu-tai (蔡鈺泰) explained that this forecast reflects the central government’s budget cuts, including NT$21.7 billion in operating expenses (US$661 million) and NT$17.3 billion in equipment costs, per CNA.

Tsai added the additional cuts and freezes could impact GDP growth by 0.2 to 0.3 percentage points. If all these cuts and freezes take effect, Taiwan’s economic growth rate may fall below 3%.

The agency said that demand for AI remains strong and expects semiconductor manufacturers to expand advanced processes and packaging capacity. These factors support investment growth, offsetting geopolitical and trade uncertainties.

Regarding inflation, it said the consumer price index will rise by 1.94% in 2025, a slight upward revision of 0.01 percentage points.