AI Fuels Record Surpluses: Korea, Taiwan Face 2026 Rate Hikes
Global semiconductor sales are projected to hit a historic peak of US$975 billion in 2026, largely propelled by an escalating AI infrastructure boom. This unprecedented demand for AI-related chips is dramatically reshaping the economic landscape of key Asian manufacturing hubs. Indeed, South Korea just recorded its largest-ever monthly current account surplus in March 2026, reaching an astounding $37.33 billion. Taiwan, a central pillar in advanced chip manufacturing, similarly posted a record surplus of $69.93 billion in the fourth quarter of 2025.
Goldman Sachs economists, led by Andrew Tilton, now forecast an “AI-driven super surplus” for both economies. They anticipate South Korea’s current account surplus will climb above 10% of GDP this year, with Taiwan’s surging to over 20% of GDP. These projections underscore a profound shift, as AI-related exports are expected to nearly triple South Korea’s economic output contribution to almost 30% this year, a significant rise from less than 10% over the past decade. Taiwan’s AI-related exports could likewise exceed 30% of its GDP.
This extraordinary export surge places immense pressure on central banks in Seoul and Taipei. Goldman Sachs expects the Bank of Korea to implement two 25-basis point interest rate hikes in the third and fourth quarters of 2026. Simultaneously, Taiwan’s central bank is projected to enact two 12.5-basis point increases in the second and fourth quarters. While the Bank of Korea held its policy rate steady at 2.5% in April 2026, citing an assessment of geopolitical impacts and GDP growth, and Taiwan’s Central Bank maintained its discount rate at 2.00% in March 2026, these forecasts suggest a brewing need for monetary tightening to manage the influx of capital and potential inflationary pressures.
The AI boom represents the strongest technology cycle on record for both nations, according to Goldman Sachs. Even with reliance on energy imports, the sheer scale of chip exports is expected to overshadow energy price volatility. South Korea’s GDP growth is anticipated to rebound to 2.5% this year, up from 1% in 2025, while Taiwan’s economy could accelerate to almost 10% from 8.7% last year. This rapid, technology-driven expansion, however, creates a “K-shaped” growth cycle, where a select few workers benefit disproportionately, while other sectors remain subdued. Such uneven growth complicates policymaking, necessitating targeted fiscal strategies.
Investors must monitor central bank actions closely, particularly how they balance surging export-driven growth with domestic economic stability. The sustainability of AI demand and its broader diffusion beyond data centers will be critical. While the current outlook remains exceptionally strong for Korea and Taiwan’s semiconductor-led economies, potential headwinds include geopolitical shifts, global trade policies, and the risk of overinvestment in AI infrastructure. Policymakers face the delicate task of managing currency appreciation pressures and ensuring the benefits of this AI-fueled boom are more widely distributed across their economies.
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