Taiwan

BMI View: The economy expanded by 4.02% y-o-y in Q406, its slowest rate of expansion in one-and-a-half years, following 5.02% growth in Q306. Full-year growth came in at 4.62%, slightly exceeding our 4.5% forecast. However, the economic outlook remains relatively poor. Growth is lopsided, with domestic demand constrained by ongoing political uncertainty and credit concerns, leaving the economy dependent on resilient export growth, exposing it to greater external risk. We are forecasting 3.9% growth in 2007, as domestic demand remains sluggish and export growth moderates further on the back of softening external demand.

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