AI CHIP BOOM PRESSURES KOREA, TAIWAN RATE HIKES

The AI boom is widening economic disparities within both nations, creating what Goldman describes as a K-shaped recovery. While chip exporters and tech-linked sectors gain from surging global demand, other industries lag behind. Expanding trade surpluses leave policymakers with limited room to maintain accommodative monetary policies. Both central banks face mounting pressure to tighten as external imbalances grow and inflation concerns resurface. South Korea and Taiwan rely heavily on semiconductor exports, positioning them to capitalize on AI infrastructure buildouts worldwide. However, the concentrated growth threatens to exacerbate inequality and complicates the policy outlook. Goldman expects rate pressures to intensify through the second half of 2024, with both central banks likely signaling tighter stances. The dual pressures of trade surplus management and domestic economic imbalances will shape their respective monetary policy paths.