TAIPEI (TVBS News) — The Institute of Economics at Academia Sinica Taiwan's premier research institution (中央研究院經濟研究所) released on Friday (July 4) its revised 2025 economic growth forecast for Taiwan at 2.93%, down 0.17 percentage points and falling short of the 3% target. The downward revision reflects mounting pressures from exchange rate fluctuations and international tariff uncertainties.
Research Fellow Lin Chang-chin (林常青) noted that the forecast assumes a New Taiwan dollar exchange rate of NT$29 (around US$1.00) and tariffs between 15% and 20%. He explained that U.S. Treasury Secretary Besant stated approximately 100 trade partners maintain a 10% tariff rate. The growth rate could reach 3.17% if results prove promising, but conversely, growth could plummet to 2.54% if the New Taiwan dollar appreciates beyond NT$28 (around US$1.03) and tariffs reach 20% under Section 232.
Deputy Director Yang Shu-chun (楊淑珺) of the Institute of Economics analyzed that strong expectations of a depreciating U.S. dollar have prompted Taiwan's central bank to slow the New Taiwan dollar's appreciation. Yang addressed concerns that the New Taiwan dollar could appreciate to NT$27 (around US$1.07), a rate witnessed during Trump's first presidential term, confirming such a possibility remains given its connection to potential Federal Reserve interest rate adjustments.
Lin highlighted the unpredictable nature of Trump's tariff policies, noting the New Taiwan dollar has appreciated 12% since April while emphasizing the critical need to monitor Section 232 developments. He warned of potential external demand growth slowdowns later this year due to U.S. tariff uncertainties and weakening global demand. Lin observed that while the semiconductor industry and its supply chain continue expanding capacity, heightened international trade uncertainties may decelerate investment momentum.
Lin remarked that market volatility and a cooling housing market continue dampening private consumption growth on the domestic front. Inflation remains a persistent concern, with prices for food, rent, and healthcare services staying elevated, resulting in an average annual increase of 2.04% from January to May and a projected 2025 Consumer Price Index growth rate of 1.85%. ◼