Taiwan’s economic growth slowed in 2005, with real gross domestic product (GDP) expanding at 4.1 percent, down from the 2004 rate of 6.1 percent. The slowdown was largely due to weakness in the export sector, particularly consumer electronics, and rising oil import costs. Real GDP growth for 2006 is forecast at 3.8 percent.

After coming to power in 2000, Taiwan’s President Chen Shui-bian of the Democratic Progressive Party (DPP) became the country’s first democratically elected leader that was not from the Kuomintang (KMT) party. Taiwan’s citizens reelected President Chen in March 2004 by a slim margin of 0.2 percent. In June 2006, President Chen survived calls for his resignation when an opposition-initiated motion to recall him failed to rec eive the required two-thirds vote in the legislature to be put to a national referendum.

Taiwan has very limited domestic energy resources and relies on imports for most of its energy requirements. Taiwan has encouraged investment in domestic oil and natural gas projects, including partnerships with mainland Chinese companies. However, these efforts are unlikely to yield sufficient energy resources to reverse the island’s import dependence.

Taiwan was admitted to membership in the World Trade Organization (WTO) in November 2001, concurrently with China's admission (please see the China Country Analysis Brief for more information). Unlike China, Taiwan was admitted to the WTO as a "developed country," which imposes more stringent requirements for reducing barriers to foreign competition. Taiwan recently has lifted some restrictions on direct trade with and investment in mainland China, which is expected to increase cross-strait commercial ties.