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Moderate recovery persists across the U.S., Europe, and Japan despite U.S.-Iran conflict uncertainty
Domestic and external demand jointly underpin a more balanced growth structure for Taiwan's economy |
Amid the renewed U.S.-Iran conflict, increased volatility in international oil prices has disrupted global energy markets and heightened risks to supply chains, financial markets, and inflation. Still, robust growth in AI, high-performance computing, and cloud demand has partly offset these geopolitical shocks, sustaining growth in economies deeply integrated into the global tech value chain.
Domestically, despite strong AI-related demand, traditional manufacturers remained constrained by weak global demand, intensifying price competition from China, resource crowding-out, and transformation pressures. June exports softened slightly from May, leading manufacturers to adopt a more conservative, largely "unchanged" outlook. In services, retail benefited from the mid-year "618" sales campaign, rising summer travel demand, and delivery of backlogged vehicle orders, though the plum rain season weighed on physical foot traffic. The financial sector benefited from stronger lending, active equity trading, and wealth management growth, with a notably larger share of firms optimistic than pessimistic for the month. ...Read more |
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| Economic Issues Worth Noting in AI Education |
| AI is widely seen as a major turning point in human history, and there is broad consensus on the need to cultivate more AI talent so students gain sufficient AI knowledge and skills. Yet amid this powerful AI wave, certain educational goals and priorities risk being overshadowed by AI's prominence. Demand for AI hardware and AI talent fluctuates more sharply than the AI industry itself. When training talent for AI-related sectors, care must be taken not to overreach, since growth could slow or reverse. The mega-corporations currently leading AI development are aggressively expanding investment to avoid being left behind in a potential winner-take-all outcome. This fierce competition will likely eliminate some firms; even if the AI industry keeps growing overall, its growth rate—especially investment growth—will decline. Taiwan's hardware supply chain may see an even sharper slowdown. Therefore, when cultivating talent for today's high-growth sectors, this risk must be factored in, training only appropriate numbers, while watching for AI crowding out other industries and talent development. Although AI is vital and will touch most areas of production and daily life, most students need not master it in depth. As with computers and the internet, accessible tools will emerge that even non-experts can use, so university students and highly educated professionals need not all receive advanced AI training. Education and research on AI-human complementarity should also be supported, focusing on directions that complement rather than replace human labor—reducing unemployment risk and preventing the economy from tilting too heavily toward AI-related industries. In the AI era, greater emphasis is needed on foundational learning and adaptability; education for non-AI fields must not be neglected. However powerful, AI cannot replace personal happiness or a sense of being alive. Education must cultivate well-being and meaning in life. Schools should also strengthen courses that actively exercise the mind, so cognitive abilities are not weakened by over-reliance on AI. |
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Taiwan Economic Research Monthly
Toward an AI Island: Building a Smart Living Sphere for All |
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Artificial intelligence is moving rapidly from R&D toward industrial and everyday applications, extending into urban governance, industrial upgrading, and daily life. AI diffusion, felt directly by citizens, is now a priority for countries advancing digital transformation and smart cities. Approaches vary. The U.S. strengthens infrastructure resilience and disaster response, integrating transportation, energy, and safety data via AI and cloud platforms. The EU advances climate neutrality and resilience through digital twins, balancing innovation with trustworthy data governance. Japan leverages its IOWN network and Society 5.0 vision for smart transportation, healthcare, and renewable energy dispatch. South Korea uses demonstration cities as testbeds for legislation-backed, public-private smart services. These nations now blend policy, industry, and validation beyond single-technology use. Taiwan has launched the "AI Ten Major Construction Projects Initiative," spanning smart applications, key technologies, and digital infrastructure, advancing human-centered AI to improve public services, strengthen industry innovation, narrow the urban-rural gap, and build an inclusive "Smart Living Sphere for All." This feature analyzes resilience governance, trustworthy data governance, smart transportation, AI infrastructure, commercial AI adoption, and optical network innovation, with recommendations for positioning Taiwan as an AI Island.
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