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Friday, 17 May, 2002, 11:35 GMT 12:35 UK
Taiwan beats recession
United Microelectronics factory, Taiwan
The future looks brighter for hi-tech exporters
The worst of the recession is over for Taiwan and Singapore, the latest growth figures suggested.

Both Asian economies were knocked into recession last year by the drop in orders for hi-tech goods from the United States and Europe.

Taiwan's economy beat forecasts by growing almost 1% in the first three months of this year, compared to expectations of half a percent growth, official figures showed.

Figures from Singapore showed that its economy is still shrinking, but far less rapidly than before.

Sales boost

Taiwan's economy fell into recession last spring and stayed there for nine months, posting a 1.87% decline in the final three months of last year.

A pickup in exports was behind the recent improvement, prompting the budget office to up its growth forecast for this year to 2.55% from 2.29%.

"Exports is a feature driver of the recovery," said Dong Tao, an economist with Credit Suisse First Boston.

"It's not just electronics, but you are also seeing (exports of) steel, autos, petrochemicals...virtually all cyclical (industries)."

Singapore too?

While Singapore's economy is doing less well, a senior official predicted the economy would "turn positive" in mid-summer.

But the economy still faces many risks.

"I think a lot depends on the momentum," said Tan Kong Yam, chief economist at the Trade and Industry Ministry.

He added that growth should improve in the April to June period, though it could remain weaker than last spring, and joblessness would rise for some months to come.

Singapore has been suffering its worst recession since independence in 1965.

The latest figures showed Singapore's economy shrank by 1.7% in the three months from January to March.

But the decline was modest when set against a steep drop in growth of 6.6% in the final three months of last year and 5% in the January to March period of 2002.

Electronics

There were also signs of improvement in the crucial electronics manufacturing sector, which shrank 13%, whereas it dropped 29% in the previous three months.

The overall decline in manufacturing was 3.7%, in contrast to a 19% drop.

Singapore, a city-state with no natural resources, was one of the so-called Asian Tiger economies before the 1997-98 financial crisis.

But it has been facing a twin squeeze, from the economic slowdown in its vital North American market, coupled with a competition from cheaper goods produced in China.

Earlier this month, Singapore's government issued a budget designed to maintain the city state's appeal to manufacturers by cutting taxes.

See also:

03 May 02 | Business
Singapore pins hopes on budget
22 Jan 02 | Business
Recession fears ease in Taiwan
16 Nov 01 | Business
Recession hits Taiwan
12 Oct 01 | Business
Singapore aims to boost economy
20 Aug 01 | Business
Singapore to give shares to citizens
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