The projection does not take into consideration the possible economic benefits from the expected cross-Taiwan Strait memorandums of understanding on financial regulation and supervision or the proposed economic cooperation framework agreement, according to TIER President David Hong.

In light of the fact that Taiwan's exports have not performed as well as expected in the second half of this year, the TIER revised its economic growth projection for 2009 downward from -1.91 percent to -2.89 percent.

However, a global economic recovery will boost the performance of Taiwan's export sector in 2010, with growth expected to reach 10.45 percent, reversing a 20.07 percent contraction projected for 2009, Hong predicted.

Also, the growth in private consumption is likely to reach 1.89 percent in 2010, up from 0.37 percent in 2009, Hong said.

If the bullish trend continues on the Taiwan bourse, private consumption will see even stronger growth, he said.

However, government consumption, which is projected to increase 2.96 percent in 2009, might decline by 0.13 percent next year, and the growth in government investment is expected to shrink from 24.71 percent in 2009 to 0.43 percent in 2010, he said.

According to Hong, the expected fading out of various economic stimulus programs by governments worldwide beginning mid 2010 will pose an uncertainty in Taiwan's export-dependent economy.

If Taiwan's exports are affected as a result, the country's unemployment situation will also worsen, he said.

Data from the Directorate General of Budget, Accounting and Statistics shows that Taiwan's unemployment rate stood at 6.04 percent in September, down 0.09 percentage points from the previous month.

However, the seasonally adjusted unemployment rate for the month was 6.09 percent, which was the highest on record.