TAIPEI (Taiwan News) — The Asian Development Bank lowered its growth forecasts for Asian economies on Tuesday, revising Taiwan's GDP estimate downwards from 3% to 2.3% next year, per UDN.

ADB Chief Economist Albert Park said US tariffs are at historically high levels, and trade uncertainty remains high. Park said the impact of tariffs on Asian markets is gradually taking shape.

According to the ADB, Taiwan's GDP grew by 6.8% in the first half of this year, the second highest in nearly 15 years, driven by a surge in technology exports. ADB said this was due to “frontloading” shipments in response to higher US tariffs, along with strong demand for high-tech and AI-related products.

However, ADB said Taiwan's export growth will slow in the second half of the year as 20% US tariffs take effect. The ADB also lowered Taiwan's GDP growth forecast from 3% to 2.3% in 2026, citing continued weakness in domestic demand and the impact of restrictive US trade policies on export demand. 

The Directorate-General of Budget, Accounting and Statistics previously forecast Taiwan's economic growth rate to be 2.81% next year.

The ADB believes the full impact of US tariffs on Taiwan's economy will become more pronounced in 2026, with the AI ​​investment boom potentially slowing. Furthermore, the continued push for high-end chip production in the US, China, and Japan will undermine Taiwan's advantages.

ADB noted the risks Taiwan faces in 2026 include increased government spending, particularly defense spending, which will rise 23% to 3.3% of GDP, and a special budget of US$18.6 billion (US$566 billion) to subsidize households and industries affected by US tariffs.

The ADB said US tariffs are affecting emerging Asia economies more than other regions, particularly China. Excluding exemptions and industry-specific tariffs, the average tariff faced by emerging Asia is 28.1% higher than under the World Trade Organization's free trade agreements.