ADB raises Taiwan’s 2026 growth forecast to 11% on AI export surge

The Asian Development Bank on Wednesday raised its 2026 GDP growth forecast for Taiwan to 11 percent, the highest in developing Asia, as a surge in artificial intelligence-related exports powered the island's economy to its fastest first-half expansion in half a century.focustaiwan

The upward revision, published in the ADB's Asian Development Outlook September 2026 report, marked a 1.5 percentage point increase from the bank's July projection. Taiwan's economy grew 14.1 percent in the first half of the year, with technology exports rising 65 percent in U.S. dollar terms over that period. Private consumption grew nearly 6 percent, up from 1 percent in 2025, supported by higher stock prices, wage growth spilling over from the technology sector, and stable property prices.focustaiwan

The report reflects a widening divergence across Asia, where economies tied to the global AI investment cycle are surging while those exposed to energy costs, geopolitical disruption, and structural weaknesses are falling behind.

Winners: AI and Tech-Driven Economies

Beyond Taiwan, the ADB raised growth forecasts for several economies benefiting from strong technology demand and robust domestic activity. Vietnam's 2026 projection was lifted to 7.8 percent from 7.2 percent in July, after the economy expanded 8.2 percent in the first half on the back of manufacturing and rising consumption. Malaysia's forecast was raised to 4.9 percent from 4.6 percent, driven by robust tech exports. India's projection for the current fiscal year was revised up to 7 percent from 6.6 percent, after GDP expanded 7.8 percent in the first quarter.business-standard+2

ADB President Masato Kanda cautioned that "the region has remained resilient, but the risks are growing," pointing to a strengthening El Niño that threatens smaller harvests and reduced hydropower across the region.theedgemalaysia

Losers: Conflict, Climate, and Structural Drag

The Philippines saw the sharpest downgrade. The ADB cut its 2026 growth forecast to 3.3 percent from 3.8 percent, after the economy slowed to just 2.3 percent growth in the second quarter — the weakest since late 2009 outside the pandemic years. ADB principal economist John Beirne cited tightening global financial conditions, sluggish public investment, and El Niño as compounding factors.tribune

Bangladesh's outlook also darkened, with its forecast trimmed to 4 percent from 4.5 percent in July. The ADB warned that banking-sector stress, unreliable energy supply, and high non-performing loans are limiting private credit and investment, while inflation is now expected to reach 9 percent. Pakistan's forecast was held steady at 3.7 percent, with the ADB warning that expensive energy could limit the pace of recovery.tbsnews+1

Risks Ahead

The ADB identified two overarching threats to the region: an escalation of the Middle East conflict, which has already pushed up global energy prices, and a strong El Niño forecast to persist through the first quarter of 2027, raising food and fuel costs across the continent. The report also flagged the possibility that a sharp correction in AI-related equity valuations could tighten financial conditions and dampen the very investment cycle now driving Asia's top performers.theedgemalaysia

Taiwan's export outlook, the ADB noted, "depends heavily on the AI-driven investment cycle remaining robust, which currently appears likely." The bank raised its 2027 Taiwan growth forecast to 5 percent from 4 percent, expecting moderation as capacity expansion meets demand and the 2026 surge creates a high comparison base.focustaiwan