TAIPEI: Taiwan's economy will post a narrower contraction this year than previously forecast, but the new estimate of a 2.53 percent contraction will remain the worst decline in history, the government's chief statistician said yesterday.

Briefing the media on the domestic economic situation, Shih Su-mei, head of the Directorate General of Budget, Accounting and Statistics (DGBAS), said the latest forecast marks a 1.51 percent reduction from the figure forecast in August, when the gross domestic product (GDP) was estimated to shrink 4.04 percent year-on-year.

"Nevertheless, the figure remains the largest-ever contraction in recent memory," said Shih, adding that the narrower GDP contraction forecast is based on better-than-expected economic numbers recorded for the third quarter of the year.

"Initial statistics show that our economy shrank 1.29 percent year-on-year in the July-September period, marking the slimmest contraction in a year," Shih said.

Describing the figure as the clearest indication yet that Taiwan's trade-dependent economy is recovering from a year-long downturn, Shih attributed the encouraging trend mainly to a steady recovery in exports and gradual rebounds in private consumption and investment.

Amid the global financial crisis, Taiwan's economy began a downward spiral in the third quarter of 2008, when the GDP posted a 1.05 percent decline, a rare event at that time.

Looking ahead, Shih forecast optimistically that the GDP will register 6.89 percent growth in the fourth quarter of this year as compared with the year-earlier level.

"It will mark the first positive growth after five consecutive quarterly contractions," Shih said.

In August, the DGBAS tentatively estimated that Taiwan's GDP contracted 10.13 percent year-on-year in the first quarter of this year and shrank 7.54 percent in the second quarter. However, it revised yesterday its estimates to smaller declines of 9.06 percent and 6.85 percent for the first and second quarters, respectively.

According to the latest DGBAS forecast, Taiwan's per capita gross national product (GNP) will reach an estimated $16,914 this year, while the consumer price index (CPI) will post a 0.73 percent decline from last year's level.

Meanwhile, the official statistics agency said yesterday it may raise its forecast for Taiwan's economic growth for 2010 to 4 percent. With the global economy moving from recession into recovery and Taiwan exports better than expected during the second half of this year, economic prospects appear better, an analyst said yesterday.

Liang Kuo-Yuan, president of the Polaris Research Institute made the remarks a few hours before the DGBAS unveiled the latest national income statistics, including economic data for the third quarter of this year and revised its estimates of the gross domestic product (GDP) for 2009 and 2010.

China Daily/CNA

(HK Edition 11/27/2009 page2)