Taiwan's Economy Grows 4.32%

Rising inflation curbs consumption

In the April-June period Taiwan's economy grew 4.32% from a year earlier as export demand from emerging markets helped to offset weak domestic consumption, the government said August 22.

During the three month period, rising inflation curbed private consumption, which rose just 1.06% from a year earlier. For the whole of 2008, private consumption is expected to grow 1.38%%, down from an increase of 2.55% for 2007.

"A U.S. slowdown has spilled over to other economies, including Europe and Japan," the Directorate General of Budget, Accounting and Statistics said. "At the same time we have high inflation that is threatening growth in emerging markets, which will affect our exports."

The agency revised the island's gross domestic product growth for the quarter to March to 6.25%, from a preliminary 6.06% estimate.

"Apart from weak private consumption, Taiwan will also face a decline in domestic investment," Mega Securities analyst Lucas Lee said. Lee also said a global economic slowdown is expected to impact Taiwan's exports, which have served as an engine of economic growth. "I am not optimistic about the second half of this year," he said.

Copyright Agence France-Presse, 2008

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