The Directorate General of Budget, Accounting and Statistics (DGBAS) yesterday raised its forecast for economic growth this year to 4.74 from its previous prediction, made in November, of 4.1 percent.
The economy grew 3.24 percent last year and 3.59 percent in 2002, the DGBAS said.
The economy grew 5.17 percent in the fourth quarter of last year from the year before and is expected to grow 5.16 percent in the first quarter and 5.21 percent in the second quarter this year, the agency said in a statement.
The DGBAS said it made the revision because of the revival in the global economy led by the US and China which is increasing imports from neighboring countries. As one of the largest exporters to China, Taiwan is expected to export 10 percent more this year.
The increase in trade will attract private investment, especially in thin-film transistor liquid-crystal displays, or TFT-LCD, semiconductors and DVD-R makers, it said.
The DGBAS said government spending, which is expected to grow by 1.4 percent this year, and rising domestic consumption, forecast to grow 3.3 percent, would also contribute to economic growth.
The consumer price index will likely expand by 0.48 percent, the statement said. Taiwan experienced a recession in 2001 and commodity prices have remained unchanged since then.
The government's GDP forecast is lower than those by private institutes.
The Taiwan Institute of Economic Research (
Chen Tain-jy (陳添枝), president of the Chung-Hua Institution for Economic Research (中經院), said on Thursday that GDP growth will definitely grow more than 5 percent this year, a prediction he based on better-than-expected economic indicators from the past two months. Last year, his institute forecast growth this year of 4.36 percent.
Several economic indexes have shown encouraging signs recently. The unemployment rate held at a two-year low of 4.58 percent in December, while the benchmark TAIEX on Thursday reached a 41-month high of 6,681.52.
Overseas economists are even more upbeat about the nation's economy. A report from UK-based Economist Intelligence Unit (EIU) last month said the economy would grow by 5.4 percent this year. Goldman Sachs also revised upward its forecast from 5 percent to 5.8 percent in a report published in November.
One element of uncertainty is the presidential election, but analysts said they expected only a short-term effect.
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