Asia’s emerging economies not only lead the global recovery but also have greatly contributed to the strong growth of Taiwan’s GDP which increased by 13.21% during the first half of 2010 against the deep recession of -1.93% in 2009. This is reflected by the nation’s economic monitoring indicators, which became a “yellow-red” light in October. At the same time, the imports rose at an annual rate of 36.6% and the exports also increased at an annual rate of 46.9% between January and November. Benefiting from the rapid economic recovery in the Asia-Pacific region, the export and import value has exceeded the amount for the same period of pre-crisis in 2008. Besides, the industrial production index grew at an annual rate of 14.39% in October with the launch of consumer electronic products and high demand in emerging markets. Moreover, the turnover of the wholesale, retail and catering industry hit a new record in October, indicating that the service industry has continued to recover. Hence, the fourth quarter of GDP is projected up by 5.9%, amounting to an expected increase in the annual GDP by 10.31% in 2010.

Private consumption continues to rise by a rebound of the domestic economy and stock market, accompanying the innovation of consumer electronics products. At the same time, the effective government employment programs significantly stimulated the growth of consumption, and caused the unemployment rate to fall to 4.92%, 4.96% after seasonal adjustment in October. As a result, private consumption will be estimated at an annual rate of 3.54% in 2011. Similarly, private investment is expected to maintain steady growth in 2011, and pushed by the momentum of recoveries of emerging Asia and urban renewal projects, reaching a growth rate of 1.57% because of a higher comparison base with 2009. The Asian Development Bank expects that the economic growth of emerging East Asia will remain at 7.3% in 2011. Thus Taiwan's annual export and import of goods and services is expected to grow 7.71% and 5.07% respectively in 2011 due to the effectiveness of ECFA.

Although the raw materials and crude oil prices continue to rise, inflationary pressures in Taiwan are not expected to be very high this year considering that economies such as China gradually control monetary policy and the NT dollar appreciates against the U.S. dollar. Therefore, annual wholesale price index is estimated at an annual rate of 2.42%, and the CPI will moderately grow 1.87%. As for money supply, on account of strong domestic economic performance and sufficient domestic funds, the money supply is expected to increase stably in 2011. The money supply of M1B annualized will be 9.66% and that of M2 will be 5.43% in 2011.

In conclusion, Taiwan will grow moderately and its GDP should remain at an annual rate of 4.71% in 2011 due to the uncertainty of the international economic situation. Furthermore, it is worth noting that the debt problems of Europe, the monetary policy of China, and the NT dollar appreciation against the U.S. dollar will have a significant impact on Taiwan's future economy. Hence, considering the prediction error and uncertainty factors, the interval prediction of the 50% GDP is between 3.03% and 6.56%.
     Related website: http://www.econ.sinica.edu.tw/reports.php?searchYear=&searchStyle=&parentClassID=0&foreLang=en&parentMenuID=50&titleMenuID=109