For proof that an economy can thrive even under constant military threats from a powerful neighbor and amid US President Donald Trump’s sweeping global tariffs, look no further than Taiwan.

The budget will be allocated over eight years, from 2026 to 2033, and comes after President Lai Ching-te pledged to raise defense spending to 5% of the island's GDP, as part of his strategy amid China's threats of invasion.

The budget will be allocated over eight years as part of the island's strategy to deter a China's threats of invasion

The remarks come amid the two countries’ worst diplomatic crisis in years, after the Japanese prime minister said a Chinese attack on Taiwan could trigger a military response from Tokyo.

Gross domestic product is expected to expand 3.54% in 2026, according to a statement from the statistics bureau in Taipei on Friday. That compares with the previous forecast of 2.81% back in August. Exports were projected to grow 6.32% for the year, versus an earlier call of 2.19%.

Japan, a U.S. ally that had angered China on Taiwan, found the message worrying.

Taiwan has sharply raised its economic growth forecast for 2025 to 7.37 per cent, the fastest rate in 15 years, as roaring demand for artificial intelligence continues to boost its electronics exports.

Taiwan Premier Cho Jung-tai said on Tuesday that a "return" to China is not an option for the island's 23 million people, after Chinese President Xi Jinping pressed his country's sovereignty claims in a call with U.

China closed off Japanese seafood imports after Japan’s new leader declared strong support for Taiwan. Suddenly, sushi is everywhere on Taiwanese social media.