Taipei [Taiwan], July 18 (ANI): Taiwan's economy is forecast to grow by 3.05 per cent in 2025, supported by strong export momentum in the first half of the year that is expected to ease in the latter half, according to the Chung-Hua Institution for Economic Research (CIER), reported Focus Taiwan.

According to the report, CIER projected GDP growth to slow to around 1.08 per cent in the second half of 2025, down from an estimated 5.17 per cent increase in the first half.

The anticipated slowdown is attributed to the lingering impact of Trump-era tariff policies and a high base effect from early 2025.

According to the news platform, CIER explained that first-half growth exceeded expectations as foreign buyers accelerated orders to avoid US tariffs.

Taiwan's technology sector also benefited from strong demand, particularly driven by AI-related exports, the platform reported.

Trump's administration initially announced sweeping tariffs on April 2, including a 32 per cent tariff on Taiwanese goods, before pausing them for 90 days starting April 9 to facilitate trade negotiations.

CIER estimated Taiwan's export growth will decelerate to 6.71 per cent in the third quarter and further to 2.55 per cent in the fourth quarter, a sharp decline from 20.29 per cent in the first quarter and 27.12 per cent in the second quarter.

For the full year 2025, Taiwan's exports are projected to grow 13.74 per cent, while imports are expected to increase by 15.28 percent, the institution said.

CIER President Lien Hsien-ming noted that despite tariff challenges, Taiwan's strength in AI development should help sustain growth momentum into the second half of the year.

Lien also cautioned that the Trump administration might impose tariffs of 15-20 per cent on Taiwanese goods due to close business ties. He warned that higher tariffs could contribute to rising inflation in the U.S. by making imports more expensive.

Private investment growth is expected to moderate each quarter throughout 2025, falling from 20.77 per cent in the first quarter to 3.96 per cent in the second, 2.31 per cent in the third, and 1.69 per cent in the fourth quarter.

CIER forecasts private investments to grow 7.03 per cent for the year, with fixed capital formation rising 6.60 per cent to help drive overall GDP growth.

Private consumption is projected to increase by 1.57 per cent in 2025, tempered by a high comparison base from the previous year.

While a stronger Taiwan dollar is expected to alleviate import price pressures, recent natural disasters have pushed up food costs, and labour shortages have raised expenses in the service sector.

CIER expects Taiwan's consumer price index to rise by 1.89 per cent in 2025, remaining below the central bank's 2 per cent alert threshold.

As the U.S. dollar weakens, CIER forecasts the Taiwan dollar will average NT$30.32 against the U.S. dollar in 2025, appreciating 5.92 per cent from 2024.

Looking ahead, CIER projects Taiwan's economy to grow 2.48 per cent in 2026, according to the forecasts, reported by Focus Taiwan. (ANI)