TAIPEI, Jan 31 (Reuters) - Taiwan's preliminary fourth-quarter gross domestic product grew 3.42 percent on year, beating expectations.

The government raised its 2013 GDP forecast to 3.53 percent from 3.15 percent previously, while it also lifted the inflation target to 1.31 percent from an earlier estimate of 1.27 percent.

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KEY POINTS:

Q4 preliminary GDP +3.42 pct y/y (Reuters poll median +3.1 pct)

Q4 GDP +1.47 pct q/q seasonally adjusted

2013 GDP +3.53 pct (previous forecast +3.15 pct)

2013 CPI +1.31 pct (previous forecast +1.27 pct)

COMMENTARY:

SCOTT CHEN, ECONOMIST, SINOPAC COMMERCIAL BANK, TAIPEI:

'Taiwan's economic growth will be better this year as Europe's outlook is becoming positive, it will have a bigger rebound as an export-oriented economy.

'CPI will be slightly higher than last year, but because of a high base last year, it will not grow too much.

'We don't expect the central bank to put forward any monetary policy changes until Q4 at the earliest; the economy is not good enough to raise rates yet. There will be more uncertainties in H2 though, if China push out reforms to regulate the over-heating property market.'

MARKET REACTION:

The data came before the opening of financial markets. The TAIEX share index closed up 0.4 percent at 7,832.98 on Wednesday.

LINKS:

-- For the full GDP data, see the statistics agency's website at www.dgbas.gov.tw

-- For Reuters coverage of Asia GDP, see

-- For all Taiwan news and data, 3000 Xtra users can click on and.

BACKGROUND:

-- The trade-reliant island's growth was largely propelled by improving demand for technology goods globally and exports to China, its largest trading partner.

-- Orders for exports in December grew 8.5 percent from a year earlier, in line with expectations, with a jump in orders from Europe providing further evidence that global demand for Asian goods is slowly improving.

-- Although uncertainties over the global economy continue to cloud the outlook, Taiwan expects export orders to improve this year from 2012 as worldwide demand for handheld electronic devices such as smartphones remains strong.

-- Taiwanese firms are the main suppliers to most of the world's top tech brands, including Apple Inc, Dell and Nokia. The heavy reliance on electronics exports makes the island's economy especially vulnerable to swings in external demand.

-- Taiwan's index for the most recent private purchasing managers survey hit an eight-month high in December, reflecting increases in new orders and new export orders.

-- Revised GDP figures will be released about two to three weeks after the preliminary ones, with more details and a media briefing. No briefing is given for the preliminary data.

(Reporting by Taipei bureau; Editing by Jacqueline Wong) Keywords: TAIWAN ECONOMY/GDP

(faith.hung@thomsonreuters.com)(+886 2 2500 4893)(Reuters Messaging: faith.hung.thomsonreuters.com@thomsonreuters.net)

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