By Faith Hung and Jeanny Kao

TAIPEI (Reuters) – Taiwan’s trade-dependent economy grew less than expected in Q4 2024 but achieved its fastest growth in three years at 4.3%, benefiting from the AI boom and a recovery in demand from China.

Analysts warned of uncertainty ahead, potentially influenced by U.S. President Donald Trump’s tariffs or production boost calls, which may affect Taiwanese investment planning, according to Kevin Wang of Taishin Investment Advisory.

Taiwan plays a crucial role in the global technology supply chain for companies like Apple and Nvidia and is home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co.

The preliminary gross domestic product (GDP) grew 1.84% in the October-December period year-on-year, falling short of the 2.0% growth forecast in a Reuters poll and slower than the 4.17% expansion in Q3.

“Q4 growth was below forecasts mainly due to a substantial increase in imported equipment, which offset export contributions, even though AI applications led to a 9.09% gain in exports year-on-year,” Wang stated.

Quarter-on-quarter, the economy grew at a seasonally adjusted annualized rate of 2.04% in October-December.

Q4 exports rose 9.1% year-on-year, slightly ahead of Q3’s 8.1%, driven by tech-heavy exporters, including chipmakers, benefitting from AI-related demand.

Full-year growth of 4.3% aligns with the statistics bureau’s November forecast of 4.27%, marking the fastest pace in three years. In 2023, the economy expanded by 1.31%, a 14-year low.

The statistics agency is set to release first-quarter GDP data on Feb. 26, including updates to its full-year forecast.