Taipei  - A Taiwan economic research agency on Friday raised Taiwan's 2010 economic growth forecast by nearly 1 per cent, provided that Taiwan signs a major trade pact with China.

The Chung Hua Institution for Economic Research raised Taiwan's 2010 gross domestic product (GDP) growth to 4.65 per cent, up 0.96 per cent from the 3.69 per cent forecast it made in July.

"If Taiwan and China sign the Economic Cooperation Framework Agreement (ECFA), Taiwan's 2010 GDP growth could even surpass 5 per cent," Wang Li-jung, a researcher at the institution, said.

The pact, similar to a free-trade agreement (FTA), would have a positive impact on all areas of the island's economy, she said.

"It will raise Taiwan's GDP, boost exports and imports, increase domestic spending and investment, create some 260,000 jobs and improve people's welfare," she said.

Although Taiwan's economy is recovering from the global financial crisis, it was battered by Typhoon Morakot, which hit Taiwan in August, killing 178 people and causing huge agricultural damage.

Since President Ma Ying-jeou from the China-friendly Chinese Nationalist Party took office in May 2008, cross-strait ties have improved rapidly.

The two sides have opened sea, air, tourism and postal links and plan to sign the ECFA to further remove trade barriers. (dpa)