The Executive Yuan's Accounting and Accounting Office released estimated national income statistics on October 30. Taiwan's economic growth rate in the third quarter of 2026 reached 14.36%, 2.94 percentage points higher than the 11.42% forecast in August. The cumulative growth in the first three quarters was 14.22%, and it has maintained double-digit growth for four consecutive seasons since the fourth quarter of 2025 (see Figure 1).
Figure 1 Taiwan’s economic growth rate (yoy), Q1 2024 to Q3 2026 (unit: %). (provided by the author)
The key to this wave of high growth is that artificial intelligence (AI) ignites two engines of "investment" and "export" at the same time, that is, the "AI dual engine": On the one hand, in response to the deployment of AI infrastructure, companies are massively expanding advanced processes and production capacity, driving domestic investment; on the other hand, global demand for AI and high-performance computing is strong, pushing up the export of AI-related products. The two together contributed nearly 80% of the economic growth momentum in the third quarter, making Taiwan stand out at a time when the global economy is generally growing at a moderate pace.
1. Pay equal attention to investment and external demand to support double-digit growth
The seasonally adjusted annualized rate in the third quarter was 13.48%, a significant acceleration from the 5.70% in the second quarter. Broken down from the demand side, capital formation contributed 6.32 percentage points to economic growth, and foreign net demand contributed 4.94 percentage points. The two together accounted for nearly 80% of the growth in the current quarter. In the first three quarters, they contributed 11.29 percentage points in total, accounting for 79.4% (see Figure 2).
What is more noteworthy is the change in growth momentum. In the first quarter, growth mainly relied on external demand, with foreign net demand contributing 10.59 percentage points and capital formation only 2.13 percentage points. By the third quarter, capital formation had become the largest single source of growth, forming a dual-engine pattern of investment and external demand moving hand in hand. Private consumption grew by 5.37%, a solid performance, supported by the rise in the stock market and improved employment.
Figure 2 Sources of Taiwan’s economic growth in each quarter of 2026 and the first three quarters (unit: percentage points). (provided by the author)
2. Investment is highly concentrated in AI-related equipment
In the third quarter, capital formation grew by 26.36% in real terms, the highest in a single quarter since 2024. The General Accounting Office pointed out that in response to the accelerated deployment of AI infrastructure and deepening application upgrades, companies are actively improving advanced processes and technologies and expanding production capacity. In the third quarter, imports of capital equipment denominated in New Taiwan dollars increased by 58.50% year-on-year, of which semiconductor equipment increased by 35.66% year-on-year. Investment in machinery and equipment, intellectual property and construction projects also grew simultaneously.
The real growth rate of capital formation has climbed from negative growth (-2.14%) in the fourth quarter of 2025 to 26.36% in the third quarter of this year, and its contribution to economic growth has also changed from negative to 6.32 percentage points, showing that the expansion demand of the AI supply chain has become the main force driving domestic investment (see Figure 3).
Figure 3 Taiwan’s capital formation real growth rate and contribution to economic growth (unit: %; percentage points). (provided by the author)
3. Exports are highly concentrated on AI products
In the third quarter, exports of goods denominated in US dollars increased by 44.63% year-on-year, and imports increased by 44.15% year-on-year. Imports and exports expanded simultaneously. If AI hardware and supply chain-related tax items are screened, including servers, processors (including GPUs and AI acceleration chips), memories, network communication equipment, integrated circuits, and semiconductor manufacturing and testing equipment, Taiwan’s sales in the first three quarters of 2026 will Of the Gulf’s total exports of US$661.5 billion, AI-related goods accounted for approximately US$464.4 billion, accounting for 70.2%; of the total imports of US$500.9 billion, AI-related goods accounted for approximately US$235.9 billion, accounting for 47.1% (see Figure 4).
In other words, the trade surplus of AI-related goods is approximately US$228.5 billion, which is higher than the overall merchandise trade surplus of approximately US$160.6 billion. AI-related goods on the import side also account for nearly half, reflecting the tight transnational division of labor in the AI supply chain. While Taiwan is expanding exports, it also needs to import a large amount of key components, raw materials and equipment.
Figure 4 The proportion of AI-related goods in Taiwan’s exports and imports in the first three quarters of 2026. (provided by the author)
4. Growth performance ranks first among major economies
Taiwan's recent economic growth performance ranks highest among major economies. Among the economies that have released third-quarter data, Taiwan grew by 14.36%, Singapore at 5.4%, China at 4.5%, South Korea at 3.4%, and the United States at 2.1%. If measured at a seasonally adjusted annual rate, Taiwan at 13.48% was also higher than China at 4.9%, Singapore at 4.4%, South Korea at 4.1%, and the United States at 3.4% (see Figure 5).
Comparing the second quarter with more complete data from various countries, Taiwan grew by 12.93%, Singapore by 6.2%, China and Hong Kong by 4.3%, South Korea by 3.7%, the United States by 2.2%, the European Union and the United Kingdom by 1.4%, Germany by 1.0%, Japan by 0.9%, and France by 0.5% (see Figure 6).
Figure 5 Economic growth rate (yoy) trends of Taiwan and major economies (unit: %). (provided by the author)
Figure 6 Comparison of economic growth rates between Taiwan and major economies in the second quarter of 2026 (yoy, unit: %). (provided by the author)
Conclusion: Continue AI momentum and spread growth benefits
Overall, Taiwan’s economic growth has been impressive thanks to its key position in the global AI supply chain. However, growth momentum is still highly concentrated in AI-related industries. If the momentum of the AI twin engines can be continued in the future and the growth benefits can be gradually spread to more industries, Taiwan's economy is expected to move towards more stable and lasting growth.
(The author is my country’s representative in Singapore)
