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Taiwan's Economy grows beyond expectation, Bloomberg said.
Taiwan's economy expanded faster than forecast in the fourth quarter, buoyed by the biggest increase in exports in almost two years.

Gross domestic product advanced 6.39 percent from a year earlier after gaining a revised 6.86 percent in the third quarter, the statistics bureau said today in Taipei. That beat the median estimate of 5.65 percent in a Bloomberg News survey of 14 economists.

Stronger-than-expected growth may stoke optimism that shipments to China and other emerging markets will cushion Asia's export-dependent economies against a slowdown in demand from the U.S. and Europe. Japan and South Korea also reported expansions in the fourth quarter that beat economists' estimates.

``Exports will continue to be the driving force in 2008,'' said Cheng Cheng-mount, chief economist at Citibank Taiwan Ltd. in Taipei.

The outcome marked a 18th consecutive quarter of growth in Asia's fifth-largest economy. Overseas shipments are equivalent to about 50 percent of Taiwan's GDP.

Taiwan Semiconductor Manufacturing Co., the world's largest custom-chip maker, is among exporters posting increased sales.

Other economies in the Asian region are reporting resilient demand even as the U.S. slows. Japan's export growth quickened in January as rising sales of cars and steel to China and Russia made up for falling U.S. shipments, the nation's Finance Ministry reported today.

Emerging Markets

The International Monetary Fund last month forecast emerging economies will expand 6.9 percent in 2008, compared with 1.5 percent growth in the U.S. China will expand 10 percent.

Taiwan's GDP report was released after the close of trading on the stock exchange. The Taiex index rose 2.4 percent today.

The stock index has dropped almost 5 percent this year on concern the U.S. economic slump will damp global growth, curbing sales for the island's exporters.

The government today lowered its forecast for the economy's expansion in 2008. Standard Chartered Bank Plc, Goldman Sachs Group Inc. and UBS AG all cut their growth estimates last month.

Taiwan's economy will grow 4.32 percent this year, lower than November's estimate of 4.53 percent, the government said. The economy expanded 5.7 percent in 2007.

``China's rising income is helping lift demand'' for Taiwan products, said Lucas Lee, an economist at Mega Securities Co. in Taipei. Still, ``the trade contribution in the first quarter has apparently declined, with the U.S. slowdown being a factor.''

Exports Surge

Exports climbed 12.9 percent in the fourth quarter from a year earlier, the biggest gain since the first quarter of 2006, today's report showed.

The contribution to Taiwan's fourth-quarter growth from net exports increased to 5.3 percentage points compared with 3.3 points in the third quarter.

Taiwan's exports to China, the world's fastest growing major economy, have helped compensate for the U.S. slowdown. There was a 12.6 percent increase in goods bound for China and Hong Kong combined in 2007. Shipments to the U.S. dropped 0.9 percent last year.

China, which regards Taiwan as one of its provinces, is increasing trade and investment links with the island in spite of a ban on direct transport across the 100-mile Taiwan Strait that separates them.

Taiwan Semi posted its first profit gain in five quarters on higher sales of products used in mobile phones and computers.

``Mainland China is growing very quickly,'' Chief Executive Officer Rick Tsai told reporters on Jan. 31.

U.S. Fallout

``We're still assessing the full impact of the subprime crisis and the economic slowdown,'' Tsai said. ``But if you look at GDP per capita in the U.S. compared with Europe or Japan, it's still very high, so spending power is still very high.''

Chi Mei Optoelectronics Corp., Taiwan's second-biggest maker of liquid-crystal displays, plans to invest an additional $131 million in its three China units to tap rising demand for slim screens used in LCD televisions and mobile phones.

Taiwan's private consumption climbed 2.2 percent in the fourth quarter from a year earlier, slower than the third quarter's 3.6 percent increase, today's report showed. Corporate investment fell 2.4 percent in the fourth quarter.

The government said it expects private consumption to rise 2.9 percent in 2008, the biggest gain in four years, as record cash dividends paid by listed companies buoy spending.

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