Taiwan: Country outlook

COUNTRY VIEW FROM THE ECONOMIST INTELLIGENCE UNIT OVERVIEW: Domestic political tensions will stay high ahead of the presidential election scheduled for early 2004. Relations between Taiwan and China will remain uneasy. GDP growth will be 3.2% in 2003 and 5.4% in 2004. Consumer prices will rise by an annual average of 0.3% in 2003, with inflation picking up to 1.4% in 2004. The New Taiwan dollar is expected to firm against the US dollar from the second half of 2003. The current- account surplus will …

…particular China, will continue to provide some stimulus to the country's external sector. Imports have also been rising since mid- 2002. This trend is likely to be interrupted by fragile domestic demand (not helped by SARS) and the loss of momentum in export growth, although import growth is still expected to outpace export growth in 2003-04. As a result, the current-account surplus will narrow from US$25.7bn (9.1% of GDP) in 2002 to US$17.4bn (5.6% of GDP) in 2004.