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A Pacific island has become one of the biggest economic success stories of the year so far.

Taiwan has witnessed a dramatic boom in recent months driven by the mania for artificial intelligence (AI). Earlier this year, its stock exchange soared to become the fifth largest in the world based on market capitalisation, the value of its publicly traded shares, overtaking the United Kingdom, Canada and India.

Much of that upward momentum has been driven by AI and other technology exports highly sought after by the United States.

Last year, the US imported $201bn worth of goods from Taiwan, nearly double its rate from 2024, when it acquired $116bn in imports. In May, Taiwan eclipsed China to become the third-largest source of US imports, after Mexico and Canada.

Experts have described Taiwan’s market acceleration as a return to its status as a “tiger economy” — a term used to capture surging growth in East Asia. Much of the credit, they say, falls to its flourishing technology sector.

“Artificial intelligence helps explain the rising importance of Taiwan,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

But critics warn that, while Taiwan’s market remains strong, factors like tumultuous international relations, as well as demographic concerns, could complicate the island’s long-term outlook.

“It seems to be a win-win for now,” said Reza Hasmath, an academic faculty adviser at The China Institute at the University of Alberta. “But Taiwan is just postponing a reality that’s not sustainable.”

An economic boom

Taiwan’s thriving export market helped boost its gross domestic product (GDP) to 8.63 percent in 2025.

That rocket-ship trajectory continued into the first quarter of this year, when the GDP saw an exhilarating 13.69 percent rise.

Government data released on Friday showed that the island is continuing that momentum, with its economy growing an impressive 12.92 percent in the second quarter of the year, which ended in June.

“The GDP growth is going like gangbusters,” said Dexter Tiff Roberts, nonresident senior fellow at the Atlantic Council’s Global China Hub.

Roberts expects the trend to be “long term”, as Taiwan produces about 90 percent of the advanced chips used to power leading AI models.

“That’s not going to go away. We know the world, and the US, needs this,” he added.

While the AI boom is a global phenomenon, the US has become a major market for such chips, with billions of dollars flowing into the industry each year.

US President Donald Trump, meanwhile, has pledged to bolster his country’s status as “the world leader in artificial intelligence”. His administration has claimed to attract more than $2.7 trillion in tech and AI investments since the start of his second term.

To secure US access to Taiwan’s cutting-edge semiconductor technology, the Trump administration signed an agreement under which Taiwan will invest $500bn in the US.

Half of that amount is expected to come in the form of direct investments by Taiwanese semiconductor and tech firms, including through the development of onshore tech manufacturing.

The rest is largely comprised of credit guarantees for additional investments from Taiwan in the US.

Under the agreement, Taiwanese firms would be allowed to import 2.5 times the capacity of their US factories, without fear of steep tariffs.

In a subsequent trade agreement, Taiwan agreed to reduce its tariffs on 99 percent of US exports.

Taiwan has also boosted its tech exports to the US through investments in nearby Mexico, with cross-border plants manufacturing inputs for data centres in Texas.

‘Unbalanced relationship’

But Hasmath, the faculty adviser at the University of Alberta, warns that there are troubling signs on the horizon for Taiwan-US relations.

Trump has long sought to eliminate trade deficits with US economic allies, and he has lashed out at countries that export more to the US than they import.

Hasmath pointed out that Taiwan is building a robust trade surplus with the US, close to $200bn and counting. That could spark a backlash.

“This is an unbalanced relationship and not conducive to Taiwan in the long term,” Hasmath warned.

Trump will not tolerate a hefty trade surplus for long, he added. Hasmath believes the US president will soon look to renegotiate his country’s deals with Taipei.

Roberts at the Atlantic Council, meanwhile, warned that Trump is “mercurial” — and with such a temperament comes “uncertainty”.

Then there’s the question of political upheaval in the US. Trump’s approval ratings are low, and he is ineligible under US law to run for a third term as president.

Demographic problems

While Taiwan’s economic boom is “very real” and “very obvious”, Roberts said there are clear vulnerabilities even on the domestic front.

Taiwan’s traditional export sectors like plastics and textiles are underperforming. Plus, Roberts pointed out that only a small fraction of the Taiwanese population is involved in the AI sector.

“A majority of the younger population is not in hi tech, so that’s a real problem,” he said.

While the booming stock market has sparked a “wealth effect” — those with rising portfolios feel richer and are more inclined to spend — that helps the wider population only to an extent.

With most of Taiwan’s employment concentrated outside of the AI sector, economists have warned that the island could develop what’s called a K-shaped economy, where the wealthy see growth, while the poorer segments of society stagnate or decline.

The chip industry employs up to 350,000 people at most, experts say.

Meanwhile, TSMC, Taiwan’s biggest chip company, makes up to 40 percent of the stock market and provides four percent of the island’s GDP growth. That lopsided proportion is “unsustainable”, according to Hasmath.

Plus, Taiwan has a rapidly ageing population, with roughly a fifth of its population over the age of 65.

The island also has other vulnerabilities. For example, it relies heavily on foreign imports of energy products, particularly oil, and has struggled with water scarcity.

Then, there’s the superpower next door: China. The government in Beijing considers Taiwan, a self-governing island, as its own territory, and it has taken aggressive measures to limit the island’s ability to establish diplomatic relations of its own.

That conflict has added fuel to the debate around Taiwan’s growth, with a spokesperson for the Chinese government reportedly saying the island’s growing proximity to the US tech sector will “drain Taiwan’s economic interests” and “hollow out” the country’s major industry.

Hasmath said that, if the AI boom backfires on Taiwan, all of that ultimately adds up to a “recipe for electoral change, a shift in government” in Taipei.

Shafali Verma’s half-century helps the 50-over world champions reach the target inside 17 overs at Old Trafford.

India beat Bangladesh by five wickets in Manchester to bolster their hopes of a semifinal place at the Women’s T20 World Cup.

Chasing a modest target of 137 at Old Trafford, opener Shafali Verma struck 53 from 34 balls as India reached their target inside 17 overs on Thursday.

South Africa, meanwhile, capitalised on a maiden T20 international century from Tazmin Brits to overwhelm the Netherlands by 88 runs.

That means India and South Africa are now effectively involved in a shootout for the second semifinal spot behind unbeaten Group A leaders Australia.

They both have six points, two behind the Australians and two ahead of Bangladesh, who still have a slim mathematical chance of qualifying for the knockout stages, with their last pool match against South Africa at Lord’s on Sunday.

India have the better run rate but face the daunting task of toppling Australia in their game on Sunday, which is also at Lord’s.

The Indians will likely need to improve their fielding against six-time champions Australia after dropping four catches on Thursday, although Bangladesh were too weak to capitalise as they slumped to 136-8.

Spin again provided the bulk of India’s wickets, with Radha Yadav taking 3-28 and Shree Charani 2-21.

South Africa were never in danger once Brits and Laura Wolvaardt put on 121 for the first wicket.

When Wolvaardt departed for 45, Brits continued to cane the Dutch bowlers with Annerie Dercksen, who made 37 not out off 16 balls.

Brits finished with 114 not out from 69 balls with 15 fours and three sixes as South Africa finished on 208-1.

The Dutch also made a good start with openers Phebe Molkenboer (41) and Sanya Khurana (36) adding 58 for the first wicket. Sterre Kalis kept the momentum going with a 28-ball 26, but once those three were gone, the innings folded.

Medium-pacer Ayabonga Khaka was the most successful of the bowlers with 3-19 while slow left-armer Chloe Tryon took 2-16 from her four overs.

Russia’s influence across its traditional sphere of influence is facing growing challenges as the war in Ukraine continues to consume military, economic and diplomatic resources. For decades, Moscow maintained strong ties with former Soviet states through security guarantees, energy supplies and economic integration. However, several longtime partners have increasingly sought closer relations with the West, raising concerns in the Kremlin about the erosion of its geopolitical position.

One of the most notable examples is Armenia, a longtime Russian ally that has recently deepened engagement with the United States and Europe while exploring a path toward eventual European Union membership.

What Happened

Russian President Vladimir Putin has warned Armenia that pursuing closer integration with the European Union could come at a significant economic cost. Ahead of Armenia’s parliamentary elections, Putin suggested that Yerevan could lose access to discounted Russian oil and gas if it continues moving toward the EU.

The warning comes as polls indicate that the party of Armenian Prime Minister Nikol Pashinyan, who has pursued a more Western-oriented foreign policy, is likely to perform strongly in the vote.

Russia has already taken measures that many observers view as pressure tactics, including temporary restrictions on certain Armenian exports and warnings about possible reductions in economic cooperation.

Why Armenia Is Moving Closer to the West

Relations between Moscow and Yerevan have cooled significantly in recent years. Armenia signed a partnership agreement with the United States last month and has taken legislative steps that could eventually support EU membership aspirations.

Pashinyan’s government argues that Armenia must diversify its international partnerships and reduce its dependence on any single power. Supporters of closer Western ties point to economic opportunities, political reforms and security cooperation as key motivations behind the shift.

Russian officials, however, view Armenia’s growing engagement with Western institutions as part of a broader effort by the United States and Europe to weaken Moscow’s influence in the South Caucasus region.

Russia’s Wider Struggle to Retain Influence

The dispute with Armenia highlights a broader challenge facing Russia as it attempts to preserve its global standing while remaining heavily focused on the war in Ukraine.

Across multiple regions, Moscow is confronting increasing competition from Western powers. In Europe, countries once considered friendly to Russia are strengthening ties with the European Union and NATO. In the Balkans, political pressure is growing on governments that have traditionally maintained close relations with Moscow.

Russia also faces challenges in Moldova’s breakaway region of Transdniestria, where pro-European political forces are gaining influence. In Central Asia, Moscow is closely watching expanding Western engagement in a region it has long regarded as part of its strategic sphere.

Beyond its neighborhood, Russia’s relationships with partners such as Cuba, Venezuela and Iran are being tested as geopolitical dynamics shift and Western pressure intensifies.

What Comes Next

The outcome of Armenia’s parliamentary election will be closely watched in both Moscow and Western capitals. A victory for Pashinyan’s party could strengthen Armenia’s efforts to deepen ties with Europe and the United States, potentially leading to further tensions with Russia.

For the Kremlin, the situation represents a broader strategic dilemma. As the war in Ukraine continues without a clear resolution, Russia must balance military commitments with the need to maintain influence among traditional allies increasingly exploring alternative partnerships.

The coming months are likely to reveal whether Moscow can preserve its position in regions it has long considered part of its sphere of influence or whether Western engagement will continue to reshape the geopolitical landscape across Eastern Europe, the South Caucasus and beyond.

With information from Reuters.