By Faith Hung and Jeanny Kao
TAIPEI (Reuters) -Taiwan's export-driven economy grew in the second quarter of 2025 at its highest rate in four years as tech
demand remained robust despite the looming threat of U.S. tariffs.
The island is awaiting more clarity on the outcome of just-concluded trade negotiations with U.S. President Donald Trump's administration ahead of his August 1 deadline for a deal to avert heavy levies on imports from Taiwan.
Taiwan's gross domestic product grew 7.96% year on year in the April-June quarter, the Directorate General of Budget, Accounting and Statistics said on Thursday. That beat both the 5.7% forecast in a Reuters poll and the 5.48% in the first quarter.
"Clients have ramped up their inventory stocking, driven by solid demand for artificial intelligence and emerging technology applications, along with the approaching deadline for the U.S. to delay the implementation of reciprocal tariffs," the agency said, adding that domestic consumption continued to grow.
Taiwan is a key hub in the global technology supply chain for giants such as Nvidia, and home to the world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd, whose semiconductors are widely used for AI applications.
Taiwan's tech firms have reported roaring demand thanks to the surge in interest in AI applications.
TSMC this month reported a record, forecast-beating quarterly profit, but warned that future income might be hit by U.S. tariffs, though perhaps not until the fourth quarter.
The continued strong growth of the economy reinforces the view that Taiwan's central bank will be one of the few in Asia to leave interest rates unchanged over the coming year, some analysts said.
"Following signals from the Fed that a rate cut in September is not guaranteed, Taiwan's central bank is likely to adopt a wait-and-see approach, with any potential adjustments unlikely before the end of the year," said Kevin Wang of Taishin Securities Investment Advisory.
Quarter-on-quarter, the Taiwanese economy expanded at a seasonally adjusted annualised rate of 12.89%.
Taiwan's statistics agency will provide revised figures in a few weeks time, with more details and forward-looking forecasts.
(Reporting by Faith Hung and Jeanny Kao; additional reporting by Roger Tung; editing by Sharon Singleton and Mark Heinrich)
