02/22/2010, 00.00
TAIWAN
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Taiwan’s economy grows at a healthy rate thanks to the mainland

Economy grows at fastest quarterly growth in five years, reaching 9.22 per cent from a year earlier. Recovery is due to a huge jump in exports to China (+187.8 per cent). Exports to the United States and Europe decline; this raises concerns among experts.
Taipei (AsiaNews/Agencies) – Taiwan's economy grew at a healthy rate in the fourth quarter. The annualised adjusted GDP rose 18.02 per cent against third quarter growth of 8.25 per cent. On an unadjusted basis, GDP rose 9.22 per cent from a year earlier. This is the fastest quarterly growth in five years, Taiwan’s statistics agency reported Monday. The boost is greater than expected and is due to strong mainland demand. One side effect though is Taiwan’s increasing economic dependence on mainland China.

Like other export-reliant Asian economies, Taiwan has benefited from robust demand in mainland even as orders from key Western markets have sputtered.

The same is true for Thailand whose economy grew at its fastest pace in 10 years in the fourth quarter, its government said on Monday.

Foreign demand is expected to grow further, especially in high tech industry. Taiwan has also seen a rebound in domestic consumption, particularly retail sales.

“First-quarter GDP growth is likely to be stronger than the fourth-quarter because of the base effect. Growth might be lower in the coming quarters but will remain at a very healthy level,” Wai Ho Leong, economist at Barclays Capital in Singapore, told the South China Morning Post.

However, the island is not yet out of the loop. Job creation has been modest, unable to fill the gaps left by the economic crisis.

The fourth quarter of 2008 was a low point and things have not picked up that much since the onset of the global financial crisis, experts said.

“Taiwan relies on export growth, and demand from Europe and the United States is pretty weak. So based on experience, the government needs to be a bit cautious,” economist Hsu Kuo-on said.

The central bank is not expected to raise its policy rate from a record low of 1.25 per cent.

China is Taiwan’s biggest trading partner and Number 1 foreign investment destination. Exports towards the mainland soared 187.8 per cent last month from a year earlier.

However, the country’s economy remains weak because it is export-oriented. It could get weaker if it becomes over reliant on a single partner, China. This could force Taiwanese leaders to play to the tune of Beijing’s economic policies.

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