Taiwan's Economic Growth Forecast at 3.8% for 2005 Under New System

Taipei, Nov. 18 2005 (CENS)--The Directorate General of Budget, Accounting and Statistics (DGBAS) announced the adoption of a new version of national accounts for the compilation of gross domestic product. According to the new compilation method, Taiwan's economy grew 6.07% in 2004, the first time for the growth rate to exceed the 6% mark over the past seven years.

Under the new system, the DGBAS also adjusted upward the forecast growth for 2005 to 3.8%, thanks mainly to the brisk foreign trade. Hsu Chang-yao, director general of DGBAS, points out that Taiwan's economy started to pick up from the third quarter and the growth momentum will continue into next year, when the economy is forecast to grow 4.08%.

The new compilation method for the GDP is the SNA (System of National Accounts) announced by the United Nations in 1993. In compiling the new economic data, the DGBAS incorporates the data between 1996 and 2004. The new method boosts the economic growth rates by 3.5% to 5% annually during the period.

Under the new system, Taiwan's economy, for instance, grew 6.07% in 2004, higher than the adjusted 6.06% under the old system.

The economy grew 4.38% in the third quarter this year, according to preliminary calculation, mainly due to the export upturn from the third quarter. Exports are expected to continue growing in the fourth quarter, boosting the economic growth rate to over 5%.

Hsu noted that with the better-than-expected performance of exports, foreign-trade surplus has been adjusted upward to US$4.7 billion for the whole year, enhancing the forecast economic growth to 3.8%, from the original 3.65%.

Hsu reported that in line with the upward adjustment of the global economic growth forecast to 3.4% from the original 3.2%, Taiwan's economy began to pick up in the third quarter, leaving the gloomy situation in the second half behind.

Meanwhile, due to the huge price hike of produce during the summer typhoon season, the DGBAS adjusted upward growth of the consumer price index this year to 2.2%. However, given the continuing slide in global oil prices, it's estimated CPI will only rise 1.5% moderately next year.