Fri, Feb 22, 2008 page12

• GDP growth hit 5.7% last year

  STELLAR The marked increase in external demand was fueled by ASEAN, Vietnam and the Middle East, which accounted for 41 percent of the nation's total exports

  • By Judy Lin / STAFF REPORTER
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  The nation's GDP growth was 5.7 percent last year, beating initial forecasts of 5.46 percent growth on robust exports. But it will likely slow down owing to global stagnation, the Directorate General of Budget, Accounting and Statistics said yesterday.

  "The stellar increase in external demand was the main reason behind the higher-than-expected [6.39 percent] growth in the fourth quarter and the whole year," Director-General Hsu Jan-yau (許璋瑤) said, adding that exports contributed 5.26 percentage points to the overall growth in the fourth quarter last year.

  "Yet the impact of the US subprime crisis on the global economy is damping growth in most countries, including Taiwan," Hsu said.

  Hsu forecast moderate economic growth of 4.32 percent for this year, down from the 4.53 percent predicted in November.

  "Fortunately, the impact is likely to be relatively small, as the structure of our exports changed significantly last year," Hsu said.

  Exports to ASEAN countries were up 41 percent last year, while demand from the Middle East and India also saw significant increases, Hsu said. Total exports to ASEAN countries plus Vietnam, India and the Middle East accounted for 17.7 percent of total exports last year, surpassing exports to the US at 13 percent and Europe at 10.8 percent.

  In addition, the US$15.3 billion (US$483 million) net inflow last year from the triangle trade -- a common practice among China-based Taiwanese businesses that are operating via Hong Kong -- is expected to continue bolstering exports, Hsu said.

  Domestic demand, however, was weak as private investments shrank 2.4 percent and private consumption rose by just 2.15 percent.

  Chinatrust Commercial Bank (中信銀) economist Alan Liao (廖建中) said exports were likely to slow down to single-digit growth this year over a high base last year and an anticipated weakening of external demand.

  "Whether domestic consumption and investment can pick up after the presidential election or in the second half of this year will be key factors in this year's economic performance," Liao said.

  An anticipated record-high NT$960 billion in cash dividends to be issued this year could be a shot in the arm for private consumption, Hsu said, adding that consumer confidence would likely recover as the fallout from the credit-card and cash-card default crisis subsides this year.

  Listed companies, meanwhile, issued NT$860 billion in cash dividends last year, contributing to a higher-than-expected increase in stock market turnover and government tax revenues, Hsu said.

  In addition, the government said inflation would increase by 1.98 percent, up from last year's 1.8 percent, as fuel and food prices remain high.
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