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Updated Friday, July 9, 2010 10:02 am TWN, The China Post news staff

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Taiwan's investment climate rating raised after ECFA signing

Over the past six months, the manufacturing sector has recorded a 38.9-percent annual growth and private spending has also continued setting new records. “Accordingly, we can optimistically expect our GDP growth rate to reach 7 percent or even 8 percent this year,” Shih said confidently.

He said the fact that foreign economic forecast institutions have upgraded Taiwan's GDP growth predictions mark their recognition of the government's efforts to bolster economic growth.

The Cabinet-level Directorate General of Budget, Accounting and Statistics forecast in May that the GDP growth rate could reach 6.14 percent. However, after Taiwan signed a landmark economic cooperation framework agreement with China in late June, major economic research institutions in Europe, Japan and the United States all raised their ratings on Taiwan's investment climate and GDP growth forecast, according to Shih.

Nevertheless, he cautioned that uncertainty still lurks in global economic development, which Taiwan cannot fully control. “Therefore, we should still rely on our own efforts to sustain our economic growth by expanding our domestic demand and export outlets,” he added.

Foreign banks operating in Taiwan said yesterday that it's reasonable for the IMF to raise Taiwan's GDP growth projection to 7.7 percent from 6.5 percent, given Taiwan's robust overall economic performance in the first half of the year, including a sharp 49.2 percent annual increase in its exports, totaling US$131.98 billion in the period.

Securities firms also expressed optimism about a bullish performance of the local bourse over the medium to long term, amid the IMF's encouraging projection for Taiwan's economic growth rate for this year.

Earlier yesterday, Shih said that the ECFA will help increase Taiwan's gross domestic product (GDP) by 0.4 percentage points.

Under the tariff concession agreement, an “early harvest” list will allow 539 kinds of Taiwanese exports worth about US$13.8 billion to enter China tariff-free within two years after the pact comes into force. The deal is expected to lift Taiwan's GDP by 0.4 percentage points, or roughly NT$55 billion (US$1.71 billion), Shih said after an Executive Yuan weekly meeting.

The tariff concession program will help bolster Taiwan's overall production value by 0.86 percent, or some NT$190 billion, Shih said.

An additional 60,000 jobs are expected to be created because of the ECFA, which is scheduled to come into effect on Jan. 1, 2011, he added. Meanwhile, Shih said that his ministry will allocate NT$95 billion over a period of 10 years to help 17 Taiwanese industries deemed most likely to be hurt by the ECFA as “damage compensation” while they adapt to the ECFA and upgrade.

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