Taiwan sets 2010 GDP growth target at 4 pct

Taiwan is setting an economic growth target of about 4 percent for next year after the island suffered from its steepest downturn this year, the island's top state planner said on Friday.

The state planning body, called the Council of Economic Planning and Development, also aims to keep inflation at 0.9-1.0 percent in 2010, said chairman Tsai Hsung-Hsiung, after consumer prices fell on an annual basis for most of this year.

"If the private sector increases its investments, we can raise the economic growth target," Tsai told Reuters in an interview.

Tech-reliant Taiwan, which has seen its exports to China growing in September while exports to the U.S. and European markets slid, is expecting unemployment rates to fall in 2010 from record highs hit earlier this year.

Taiwan's seasonally adjusted jobless rate hit a record peak of 6.09 percent in September, while the unadjusted rate scaled a historic high of 6.13 percent in August, statistics agency data showed.

The council aimed to lower the tech-reliant economy's unadjusted jobless rates to 5.7 percent in the second quarter of next year, Tsai said, adding this year's joblessness is expected to be slightly below 5.9 percent.

"It would not be easy for the jobless figure to drop in the short term," said the chairman. "Taiwan is at a critical point as 45 percent of the unemployed is middle-aged."

Tsai said one way to improve the island's unemployment is to add more jobs in the service sector, similar to its regional peers, such as Hong Kong.

"The sector now makes up 73 percent of GDP. We hope to boost that to 78 percent," he said, without providing a timeframe.

Developing certain fast-growing private sectors, such as the biotechnology industry, would be part of the government's plans.

Taiwan aims to double private investments in biotech to T$54 billion ($1.7 billion) over the next five years from 2009, with output of T$260 billion from T$130 billion during the same period, Tsai said.

The state planning commission usually sets targets for the coming year close to the end of the year, and these targets are usually more ambitious than the statistics agency's forecasts.

Taiwan's economy grew for the first time in more than a year in the second quarter on an annualised basis and statistic agency officials said in August they expected rising demand from China to support a strong recovery. [ID:nTP93790]

The statistics agency forecast in August that Taiwan's economy will expand by 3.92 percent next year after contracting at an expected record pace of 4.04 percent this year. 

TAIPEI, Nov 20 (Reuters)