Taiwan Raises 2025 Growth Forecast Amid Tech Boom and Currency Surge

Intermediate Level | May 9, 2025

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Taiwan’s Economy Grows Faster Than Expected

Taiwan’s economy is off to a strong start in 2025. In the first quarter, GDP grew by 5.37% compared to the same period last year. This unexpected growth led Taiwan’s government to raise its full-year forecast from 3.14% to 3.6%. The main reason? A big jump in demand for computer chips and artificial intelligence (AI) products.

Companies like Taiwan Semiconductor Manufacturing Company (TSMC) saw major profits. In fact, TSMC’s net income rose by 60% over the past year. That shows just how much the world is depending on Taiwan’s technology.

The Taiwan Dollar Gets Stronger

Taiwan’s currency, the Taiwan dollar, also had a big moment. In April, it rose 3% in just one day—the biggest jump since 1988! That kind of movement is very rare.

One reason is that Taiwanese life insurance companies started bringing a lot of money back to Taiwan. They had invested hundreds of billions of U.S. dollars overseas, especially in bonds. Bringing the money back made the Taiwan dollar stronger.

No Rate Hike from Taiwan’s Central Bank

Even with the fast growth, Taiwan’s central bank kept its key interest rate at 2%. They believe inflation is under control and see no need to raise rates right now.

They did lower their own growth forecast slightly to 3.05%, showing that they are still being careful. Even though the U.S. added new tariffs on many countries, Taiwan has not been hit hard—at least, not yet.

New U.S. Tariffs Create Some Tension

In April 2025, the U.S. announced a 32% tariff on most Taiwanese goods—but not on semiconductors. Taiwan called the move “unreasonable” but chose not to fight back. Instead, they offered to drop tariffs on American goods and buy more from the U.S.

Still, some experts warn that if the tariffs stay in place, Taiwan’s manufacturing output could fall by 5%. That would be a big problem for the country.

What It Means Going Forward

Taiwan is showing strong signs of economic health, especially thanks to its tech exports. But there are still risks ahead—like trade issues and currency swings. The government will need to stay flexible and ready to adjust.

Vocabulary

Forecast (noun): A prediction about future events.
- Example: The government raised its growth forecast.
GDP (Gross Domestic Product) (noun): The total value of goods and services made in a country.
- Example: Taiwan’s GDP grew 5.37% this year.
Semiconductor (noun): A material used to make computer chips.
- Example: Taiwan is one of the top makers of semiconductors.
Demand (noun): The desire or need for something.
- Example: Demand for AI chips is growing fast.
Currency (noun): The money used in a country.
- Example: The Taiwan dollar grew stronger this month.
Tariff (noun): A tax on goods from another country.
- Example: The U.S. placed tariffs on many Taiwanese goods.
Inflation (noun): A rise in prices across the economy.
- Example: Inflation is one reason for changing interest rates.
Interest rate (noun): The cost of borrowing money.
- Example: The central bank kept interest rates at 2%.
Export (verb): To send goods to another country to sell.
- Example: Taiwan exports many electronics and computer parts.
Manufacturing (noun): Making products in factories.
- Example: Manufacturing could fall if tariffs increase.

Discussion Questions (About the Article)

What caused Taiwan to raise its 2025 economic forecast?
Why did the Taiwan dollar get stronger?
What decision did the central bank make about interest rates?
How did Taiwan respond to the new U.S. tariffs?
What are some possible risks for Taiwan’s economy this year?

Discussion Questions (About the Topic)

How important are computer chips to modern economies?
What are the pros and cons of having a strong national currency?
How can trade tariffs affect relationships between countries?
What would you do if your country was hit with high tariffs?
Do you think Taiwan should rely so much on one industry? Why or why not?

Related Idiom

“Walking on a tightrope”
Meaning: Being in a risky or difficult situation that requires careful decisions.
Example: Taiwan is walking on a tightrope, trying to grow its economy while avoiding conflict with the U.S.

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