Taiwan's Economy

As introduced by the Yearbook of the Republic of China:

Taiwan's Economy

In 2002, with world economic growth gaining momentum and the government and private sectors striving together to revive the domestic economy, Taiwan's economy recovered steadily to notch up an annual growth rate of 3.59 percent. External trade rebounded strongly, not only spurring domestic production but also leading to a 2.5 percent rise in real private investment. Although total employment increased by 0.76 percent, the unemployment rate rose to 5.2 percent due to ongoing industrial restructuring and labor-market rigidity. Consumer prices remained stable, however, with an index recording a slight decrease of 0.2 percent.

As part of its efforts to help revive the economy, in May 2002, the government launched the Challenge 2008 National Development Plan, which emphasizes such goals as strengthening international competitiveness, upgrading the quality of life, and promoting sustainable development. Built around ten programs involving substantial investments in manpower, R&D and innovation, logistics networks, and the living environment, the plan also aims to achieve significant political, financial, and fiscal reforms. Under Challenge 2008, the government and the private sector will work together over the next six years to realize seven major goals: (1) make Taiwan the home of at least 15 world-class products and technologies; (2) double the number of tourists visiting Taiwan; (3) raise R&D spending to 3 percent of GDP; (4) reduce the unemployment rate to below 4 percent; (5) boost the economic growth rate to above 5 percent; (6) increase the number of broadband Internet users to more than 6 million; and (7) create 700,000 new employment opportunities. By achieving these targets, Challenge 2008 will pave the way for Taiwan's emergence as a "green silicon island" in the first decade of the new century.

In 2003, the government allocated extra expenditure of US$1.65 billion for a pump-priming public works expansion program and US$575 million for a public service job creation program. With the implementation of these measures, combined with the upturn in the world economy, and despite the impact of the SARS epidemic in the second quarter, Taiwan's economy is projected to have recorded a 3.06 percent economic growth rate in 2003.

Macroeconomic Indicators

Taiwan's gross national product (GNP) in 2002 was US$289.3 billion, and per capita GNP was US$12,916. Its gross domestic product (GDP) in 2002 was US$281.9 billion, of which 31.05 percent was contributed by the industrial sector and only 1.86 percent by agriculture. The service sector, which has been particularly robust and responsible for generating more than 50 percent of Taiwan's GDP since 1988, accounted for 67.10 percent of the GDP in 2002.

Due to rising unemployment and declining stock values, private consumption remained conservative in 2002 and registered a real growth rate of only 1.99 percent. Government consumption fell by 0.2 percent due to the retrenchment of general purchase outlays.

In 2002, the New Taiwan dollar depreciated by 2.2 percent against the US dollar, and a rise in wholesale and commodity prices seemed likely. Due to the overcapacity of global IT equipment production, an abundant harvest of domestic agricultural products, and keen competition in the domestic market, however, the wholesale price index rose by only 0.05 percent. Declining prices of durable consumer goods and housing also led to a fall of 0.2 percent in the consumer price index in 2002.

The following table shows Taiwan's Major Economic Indicators from 2000 to 2002:

Major Economic Indicators