Taiwan's economy grows by almost 13% on AI demand

Taiwan's export-driven economy expanded faster than expected in the second quarter, government data showed on Friday, as soaring demand for artificial intelligence technology fuelled the island's growth.

Gross domestic product grew 12.9% from April to June, compared with 14.6% in the first quarter, Taipei's statistics bureau said in a statement.

That beat analysts' median forecast of 10.5%, Bloomberg News said.


Taiwan's exports surged 21.6% year-on-year in the second quarter, which was "mainly driven by the sustained strong external demand for artificial intelligence (AI) and related evolving applications", the statement said.

Imports over the same period grew by 18.3% from a year ago.

While economic growth lost some steam from the first quarter, "it is still very strong growth by any standard", said Gareth Leather, senior Asia economist at London-based Capital Economics.

"Given the ambitious investment plans of Taiwan's major semiconductor companies, investment growth should remain strong," Leather said.

"Overall, we are sticking with our forecast that the economy will grow by an above-consensus 14% this year."

Taiwan is a powerhouse in the manufacturing of semiconductors used to train and power artificial intelligence systems.

The island is home to hardware production giants TSMC, which turns Nvidia's cutting-edge designs into silicon components, and Foxconn, which assembles the processors to make data centre servers.