Fitch Ratings maintained Taiwan's Long-Term Foreign-Currency Issuer Default Rating at AA and assigned a Stable Outlook, citing the island's sizable net external creditor position, conservative fiscal management and a competitive business climate.
The ratings firm raised its projection for Taiwan's 2026 GDP growth to 9.4% from an earlier estimate of 6.9% made in March 2026. Fitch noted that the economy expanded by 8.8% in 2025 and recorded 14.6% year-on-year growth in the first quarter of 2026, driven largely by growing global demand for products tied to artificial intelligence.
Export performance strengthened markedly, with export growth of 47.1% year-on-year in the first half of 2026. The United States and mainland China were identified as key export destinations.
Fitch projects that growth will moderate as the global AI cycle cools, forecasting GDP expansion of 4.8% in 2027 and 4.5% in 2028.
The agency highlighted Taiwan Semiconductor Manufacturing Company as a dominant player in semiconductor manufacturing, holding a 70% share of the global foundry market. Fitch also reported that Taiwanese firms produce nearly 90% of global AI servers, underlining the territory's central role in the AI hardware supply chain.
On trade policy, Fitch referenced a US-Taiwan trade agreement reached in January 2026 that introduced an overall 15% tariff on exports to the United States and a 25% tariff under Section 232 on certain advanced chips.
Fitch expects Taiwan's general government debt-to-GDP ratio to fall to about 20% over the medium term, down from 27.6% in 2025. The agency anticipates a fiscal surplus equal to 1.3% of GDP in 2026. It also forecasts a current account surplus of roughly 24% of GDP in 2026, up from 19.5% in 2025.
Despite the positive fiscal and external indicators, Fitch flagged elevated cross-strait tensions following Chinese military drills around the island in October 2024, April 2025 and December 2025. Separately, political dynamics at home are affecting budget timing: the ruling Democratic Progressive Party does not hold a legislative majority, which has delayed passage of the 2026 budget and could impact NTD227 billion of planned spending, equivalent to 0.7% of GDP.
Overall, Fitch's assessment balances Taiwan's strengthened external and fiscal metrics against geopolitical and domestic political risks that could influence near-term spending and security conditions.