Taiwan economy shrinks at slower pace in 3Q

AP News
Posted: Nov 26, 2009 5:21 AM

Taiwan's economy contracted at a slower pace year-on-year in the third quarter and the government raised its growth forecast for 2010 as rising demand from mainland China spurs a recovery.

The island's gross domestic product shrank a smaller-than-forecast 1.3 percent from a year earlier in the July-September period, the Directorate-General of Budget, Accounting, and Statistics said Thursday. It shriveled 6.9 percent in the previous quarter and 9.1 percent in the first quarter.

Slumping exports _ the engine of the island's economic growth _ have led to Taiwan's worst recession since 2001.

But there has been improving demand for Taiwan's electronics and other products from China in recent months thanks to Beijing's massive stimulus spending.

The government agency forecast 4.4 percent economic growth for 2010, up from its earlier forecast of 4 percent growth.

It said the recovery should gather momentum in the fourth quarter, predicting 6.9 percent growth that would end five consecutive quarters of year-on-year contraction.

The economy is forecast to contract 2.5 percent for all of 2009. The government agency earlier predicted a 3.5 percent contraction for the third quarter and a 3.75 percent contraction for 2009.

Consumer demand ended a streak of four quarterly declines to rise 2.2 percent in the third quarter. But private investment still fell _ retreating 13.3 percent in the quarter.

Exports to China _ the biggest market for Taiwanese goods _ rose 10.6 percent in October from a year earlier, while the island's total exports dropped 4.7 percent during the month.

Taiwan's electronics and computer firms export parts and components to China for assembly before re-exporting to major markets in the world.