Taiwan's economy is bouncing back, HSBC's Economics and Investment Strategy Unit said in its latest report.
According to economist Geoffrey Barker, his team now expects Taiwan's GDP to rise four per cent in 2004 compared to an estimate of 1.9 per cent in 2003.
Taiwan exports rose 6.9 per cent year-on-year on three-month moving average terms in August because of the recent turnaround in the global manufacturing cycle particularly within the electronics sphere - an indication that Taiwan was "priming the pumps," HSBC said.
"Much of this is probably due to the need to rebuild inventories, which can be implied from the rise in the U.S. manufacturing shipment/inventory ratio," said the report.
The government has also played a vital role in invigorating Taiwan's soft economy, it added.