Sat, Nov 15, 2003 - Page 10 News List

Government raises growth forecasts

WARMING UP After the economy returned to growth in the third quarter, the government is now expecting the economy to grow by as much as 3.15 percent this year

BLOOMBERG

The government yesterday raised its forecasts for the nation's economic growth to 3.15 percent for this year from 3.06 percent it predicted in August, the Directorate General of Budget, Accounting and Statistics (DGBAS) said in a report.

The DGBAS also revised upward its economic forecast for next year to 4.1 percent from the previous prediction of 3.81 percent, the report said.

GDP, the value of goods and services produced, grew 4.18 percent in the third quarter from a year earlier, following a contraction of 0.08 percent on year in the second quarter, the DGBAS said.

The economy returned to growth in the third quarter because of increased orders for information technology equipment, which boosted manufacturing activity and raised exports, particularly to China.

"Demand in the fourth quarter will be much better than a year ago," said Dennis Liu, an assistant director at Elan Microelectronics Corp (義隆電子), which designs and makes chips used in cordless phones and computer mice. "The boost from Christmas and Chinese New Year demand is setting in. We are seeing signs of a pickup," Liu.

The government also raised its this year's growth projection for exports, which account for about half the economy, to 9.3 percent from 7.1 percent previously.

Export orders -- indicative of shipments in one to three months -- in September surged to a record and companies such as Ichia Technologies Inc (毅嘉科技) are having trouble keeping pace with demand.

"Our factories are approaching full capacity and orders are exceeding shipments," said Louise Yueh, a spokeswoman at Ichia, which makes cellphone keypads for Nokia Oyj and other handset manufacturers.

"We can't deliver within the usual four weeks and are asking for five weeks," she said.

Hsinchu-based Elan's sales may rise to as much as NT$1.2 billion this quarter compared with NT$898 million in the same period last year, Liu said.

Elan, whose customers include Vtech Holdings Ltd and TCL Corp, gets almost half of its sales from China and about two-fifths from the US.

"Exports will still be the growth driver," said Craig Chan, a Singapore-based strategist at Forecast Ltd.

"China is taking up a larger share of Asian exports as a whole," he said.

China, including Hong Kong, is Taiwan's No. 1 export market, ahead of the US. Retail sales in China rose by about one-tenth in the third quarter and those in the US grew at their fastest pace in six years.

Exports in the third quarter rose 9.6 percent to US$36.5 billion.

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