Taiwan's economy measured by its GDP could grow by more than 5 percent this year, according to various overseas economists.
On Monday, a report from UK-based Economist Intelligence Unit (EIU) said Taiwan's economy would grow by 5.4 percent this year. The bullish forecast is in line with other overseas institutions, but is well ahead of the majority of Taiwan's more conservative think tanks.
Earlier this month, Deutsche Bank's chief economist for Asia, Michael Spencer, forecast a GDP growth rate of 5.2 percent for Taiwan. Last month, Goldman Sachs upped its forecast for the nation's GDP growth rate from 5 percent to 5.8 percent.
"A broad recovery in both domestic and external demand will result in an acceleration in the GDP growth rate to 5.4 percent in 2004," the EIU report said. "The strong growth rate in 2004 partly reflects a base effect. As a result, although growth in 2005 is again expected to be driven by a healthy expansion in domestic and external demand, it will decelerate slightly, to 4.9 percent."
Taiwan's economy was "dampened by the outbreak of SARS" last year and achieved an estimated increase of just 3.3 percent, the report said.
"The spread of the disease resulted in a sharp drop-off in the number of visitor arrivals -- including the foreign buyers whose orders drive Taiwan's export growth -- and also damaged the confidence of the island's domestic consumers," it said.
The nation rebounded quickly after it was declared SARS-free in July, the report continued, both as a result of pent-up demand from overseas markets and domestic consumers, and also as a result of a recovery in the technology sector.
Local research institutes such as Academica Sinica and Chung-hua Institute for Economic Research (中經院), as well as the government's Directorate General of Budget, Accounting and Statistics, have all called for more conservative growth rates closer to 4 percent this year.
Only the Taiwan Institute of Economic Research (台經院) and Council for Economic Planning and Development's forecasts have broken the 4.5 percent barrier, calling for 4.62 and 5 percent respectively.
The world economy is also returning to strong growth, the EIU said, averaging 4.3 percent this year.
China's economy -- which may have grown by as much as 9.1 percent last year, according to a report from the country's National Bureau of Statistics released yesterday -- is driving growth in the whole of Asia.
"Strong growth in China is providing a significant boost to growth in the rest of the region, although this of course also makes regional performance vulnerable to any Chinese slowdown," the EIU report said. "More importantly for the long term, China's competitive
advantages mean that other Asian countries are having to undergo a significant [and potentially disruptive] economic restructuring in order to be able to benefit fully from their fast-growing neighbor."
But the EIU warns of "an investment bubble" in China that could burst, and too much reliance on exports to China in the face of declining demand in industrialized nations for technology products.
China overtook the US as Taiwan's leading export destination in August 2002.
Last month Taiwanese exports to its giant neighbor grew 30 percent to US$5 billion, Ministry of Finance statistics show, representing almost 36 percent of the total figure for the month.
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