DBS Group Research economist Ma Tieying has assessed Taiwan's macroeconomic outlook for the second quarter of 2026, highlighting that the country entered the year with strong growth and low inflation. This positive environment was supported by robust global demand for AI-related exports and easing US tariff pressures [1]. However, the report warns that rising energy prices, driven by tensions in the Middle East—specifically the US–Israel–Iran conflict—are disrupting global energy markets and supply chains, threatening Taiwan's 'Goldilocks' economic backdrop [1].
Key data points from the DBS report include a revised Consumer Price Index (CPI) forecast of 1.9% and a maintained GDP growth projection of 7.0% for 2026 [1]. Leading indicators suggest inflation is rising and exports are moderating in the second quarter. March PMI data revealed a sharp increase in input costs, reaching levels last seen during the Russia–Ukraine war in 2022, alongside a modest decline in export orders [1].
The report notes that the combination of rising input costs and softening exports could undermine Taiwan's favorable economic conditions. The ongoing energy shock is seen as a significant risk to the country's growth trajectory, with the potential for further inflationary pressures and export weakness if global tensions persist [1].
CONCLUSION
Taiwan's strong economic outlook for 2026 is now at risk due to rising energy prices and moderating exports, as highlighted by DBS Group Research. The CPI forecast has been revised upward to 1.9%, while GDP growth remains at 7.0%. Market participants should monitor developments in global energy markets and supply chains for further impact.