Economic growth rate is higher than forecast

The nation's economy grew a stronger than expected 3.54 percent last year due to a rebound in exports and industrial output, official data showed yesterday.

The Directorate General of Budget, Accounting and Statistics (DGBAS) had predicted in November GDP would grow 3.27 percent last year.

DGBAS said GDP in the fourth quarter grew 4.22 percent from a year earlier, after expanding 4.8 percent in the third quarter.

With expectations of continuing export growth this year in line with a recovery of the global economy, the DGBAS has raised its growth forecast for 2003 to 3.68 percent from 3.38 percent.

"The increase in imports of capital equipment in the third and fourth quarters of last year reflected expanded investments," Vice Premier Lin Hsin-yi (林信義) said. "That bodes well for economic development in 2003."

But the nation's economic growth may slow in the first half of this year as overseas sales show signs of flagging due to the possibility of a US-led war on Iraq, curbs investment and more manufacturers shifting production to China.

DGBAS cut its first-quarter growth forecast to 3.38 percent from 3.43 percent.

"The downward revision is mainly because of the recent uncertainty in the Middle East," Lin said.

Amid sluggish global conditions last year, exports rose 6.3 percent, compared with a fall of 17.2 percent in 2001. Imports rose 5.0 percent last year against 23.4 percent in the previous 12 months.

The DGBAS estimated exports would grow 7.4 percent this year and imports would expand 11.5 percent.

Last year, private investment grew 1.6 percent, compared with an drop of 29.2 percent in 2001. Private investment for this year is expected to rise 6.6 percent, the DGBAS said.

"Private spending is still sluggish, so any slight increase in this year's GDP growth rate will still be meaningless," said Tiger Cheng, an economist at Polaris Securities Co (寶來證券).