Mr Chan said industrial production grew five per cent in the third quarter, compared with 1.6 per cent and 2.5 per cent in the first two quarters, thanks in part to the stimulative impact of the weaker Taiwan dollar on export orders.

The improvement, particularly in manufacturing, led the DGBAS to boost its forecast for real GDP growth in the second half of the year to 6.3 per cent and 6.2 per cent for the year.

The DGBAS anticipates that a modest recovery in world trade growth will lift Taiwan's merchandise export growth to 8.2 per cent next year from this year's soft 4.8 per cent.

Mr Chan noted that ''much of the increase in exports would come from Southeast Asian countries and the indirect trade with mainland China''.

Adjustment in the main industrial economies would take time, he noted, and high unemployment rates would hold down demand for imports in the US, Japan and Europe.

Stronger exports, combined with slightly slower expansion of imports, may allow Taiwan to record a rise in its overall trade surplus next year for the first time since 1989.

according to the forecast.

Mr Chan said Taiwan's trade surplus should rise to more than US$9 billion next year, up from this year's low point of $8.14 billion. In 1989, Taiwan's trade surplus peaked at $14 billion.

He also said real GDP growth next year would be powered by a 9.5 per cent rise in total fixed capital investment, compared with 9.3 this year.

He said the DGBAS anticipated growth in private capital investment to rise from 11 per cent in 1993 to more than 12 per cent next year.

Lower interest rates and a weaker Taiwan dollar would also contribute to the optimistic forecast, he noted.