(Jan 31): Taiwan’s economy started 2023 in a technical recession. It ended the year recording the fastest quarterly growth in two years as booming global demand for artificial intelligence-related (AI) technology helped fuel a rapid recovery.

Taiwan’s gross domestic product expanded 5.12% in the fourth quarter of last year, the government’s statistics office said on Wednesday, the fastest pace of growth since the same quarter of 2021. That compares with the median estimate of 4.15% growth in a Bloomberg survey of economists.

Full-year growth for Taiwan reached 1.4% in 2023, the slowest pace since 2009. While the October-to-December period outperformed expectations, earlier quarters were anemic with the economy even recording a contraction in the first three months of the year.

Growing global demand for the semiconductors that underpin the boom in AI technologies has fuelled Taiwan’s recovery over the final few months of the year, even as other areas of the economy remain uncertain.

Taiwan Semiconductor Manufacturing Co — Asia’s largest company by market capitalisation — forecast on its earnings call earlier this month a “return to healthy growth” in 2024. It predicted revenue growth to bounce back to at least 20%, signalling a multi-year slump in tech demand is over.

Economists see Taiwan’s economy expanding more than 3% in 2024. That would be the strongest rate since 2021, when GDP growth topped 6.6%.

Taiwan’s economic rebound may even outpace emerging markets such as Vietnam and India, William Deng, an economist at UBS Group AG, said at a briefing on Monday. The tech recovery is seen benefitting the island’s production and exports, coupled with sustained private consumption and a recovery in investment momentum, he added.