The data from the Directorate General of Budget, Accounting and Statistics is a slight improvement on the 10.47 percent growth initially announced last month and represents the strongest growth since 1986.

The directorate also revised growth in the final quarter of 2010 upwards to 6.92 percent from the previous estimate of 6.48 percent.

Economic expansion of 10.3 percent in the Chinese economy, now the world's second-largest, stoked mainland demand for Taiwanese-made products.

"China played a role in bringing about last year's stellar growth," said Antony Chang, an economist at Taipei's Shih Chien University.

"Increased demand from the mainland helped offset lost momentum from the United States and Europe."

The finance ministry said earlier that exports jumped 34.8 percent to $274.64 billion last year, with those to China and Kong Kong hitting a record $114.75 billion, or 41.8 percent of the overall figure.

The 2010 growth was made possible by the export sector's 25.59 percent increase, the highest since 1986 when it surged by 28.23 percent over the previous year, said Shih Su-mei, the head of the directorate.

"The export sector benefited from the continued filing of orders from multinational technology companies that have been continuously launching of consumer electronic products," she told reporters.

Also contributing to the better-than-expected economic performance was an active private sector, where investment soared 32.79 percent last year, the highest since 1965, Shih said.

However, the directorate said it expects Taiwan's economy to grow 4.92 percent in 2011, slightly slower than its initial 5.03 percent estimate.

"As the comparison base of last year becomes higher, we decided to lower the forecast figure for 2011," said Tsai Hung-kun, another official at the directorate.

In June last year, Taiwan and China signed the Economic Cooperation Framework Agreement, or ECFA, which is expected to help keep up economic momentum on the island in 2011.

"The positive influence of ECFA was just on the horizon last year, but its impact will become apparent this year," said Chang, the university economist.

"However, with Taiwan increasingly relying on the Chinese mainland for continued growth, political risk will increase as well."

The sweeping trade pact will contribute 0.4 percentage points of economic growth this year, the directorate said, citing figures from the island's top economic planning body the Council for Economic Planning and Development.

GDP per capita is forecast to hit a new high of $20,783 in 2011 while the consumer price index will rise a moderate 2.0 percent year-on-year, largely driven by rising food and energy prices.

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