Demand from mainland China powers Taiwan's export growth

Taiwan's exports rose more than forecast last month, signalling the island's recovery is gathering pace amid stronger demand from the mainland.

Manufacturing on the mainland, Taiwan's biggest trading partner, expanded at the fastest pace in 19 months.

"Stronger data coming out of the mainland ahead of Chinese New Year should benefit exports," Tony Phoo, an economist at Standard Chartered, said before the report, referring to the Lunar New Year which begins on February 10. "Exports should remain in positive growth territory at least for the first quarter of this year."

Imports gained 1.6 per cent from a year earlier, for a trade surplus of US$4.13 billion in December, the report showed.

Exports of electronic products rose 6 per cent. Shipments to the mainland climbed 12.6 per cent, while those to Europe grew 11 per cent.

Meanwhile, inflation unexpectedly accelerated, even as the government said it would check price gains as it tried to bolster economic growth.

Consumer prices rose 1.61 per cent from a year earlier, after climbing a previously reported 1.59 per cent in November, the statistics bureau said.

The central bank refrained from raising interest rates last year to manage price gains as it tried to support the economy amid a global slowdown.

The Taiwan dollar gained more than 4 per cent last year against the US dollar.

Food prices rose 1.87 per cent last month, the report showed, compared with a 2.28 per cent pace in November. Transport increased 2.23 per cent and medical care climbed 1.6 per cent.

Core consumer prices, a category excluding vegetables, fruits, fish and energy, increased 1.09 per cent. Wholesale prices, which track the cost of goods sold to retailers and producers, fell 3.96 per cent.