Page last updated at 13:18 GMT, Monday, 22 February 2010

Taiwan GDP soars on exports to China

Laptop from Chinese firm Lenovo
Chinese demand for hi-tech products has led Taiwan's exports

Taiwan's economy grew at an annualised rate of 18% in the last three months of 2009, driven by demand for hi-tech products from mainland China.

The growth was better than expected, and an increase on the 8.25% expansion between July and October.

Thailand's economy also grew sharply in the final quarter of 2009, expanding at an annual rate of 5.8%.

Analysts said Thailand's growth - which saw it exit recession - was also fuelled by increased exports to China.

China's economy, which is on course to overtake Japan to be the world's second largest, grew 10.9% in the last three months of 2009.


Taiwan's economic growth is measured on an annualised basis - which shows what the annual rate would be if the latest change continued for a whole year.

Using a different measure - comparing the fourth quarter with the same period of 2008 - its economy expanded 9.2%.

Despite the strong growth, analysts expect the Taiwanese central bank not to raise interest rates from the current 1.25% low until later in the year, when it gets further evidence of the durability of the economic recovery in the US.

Hsu Kuo-an, economist at Capital Securities in Taipei, agreed that this was the best way of going forward.

"Taiwan relies on export growth, and demand from Europe and the US is pretty weak," he said.

"So based on experience, the government needs to be a bit cautious."

'Political instability'

Thailand's quarterly economic growth was the fastest for 10 years, and double what analysts had been expecting.

Analyst Vishnu Varathan, an economist at Forecast in Singapore, said there would now be "growing pressure" to increase interest rates from the current 1.25% level in the April to June quarter.

However, he cautioned that continuing political instability in Thailand made things difficult to predict.

A court is due to rule later this week whether the assets of former Prime Minister Thaksin Shinawatra were illegally amassed and should be confiscated.

Bank of Thailand Governor Tarisa Watanagase said 2010 was the year for "normalising" interest rates.

Yet referring to the political instability, he said the situation could change.

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