Boosted by strong global demand for the island's technology products during the work-from-home boom, the economy is expected to expand this year, the Directorate General of Budget, Accounting and Statistics said on Friday, upgrading its outlook.

In August, it forecast full-year growth of 1.56%, which would have been Taiwan's weakest in five years.

Gross domestic product (GDP) rose by a revised 3.92% in the third quarter from a year earlier, the strongest quarterly growth in nearly four years and up from a preliminary reading of 3.33%, the agency said.

"The upward revision was mainly attributed to better-than-expected exports as well as domestic investment," Department of Statistics Director Tsai Yu-tai told reporters.

The agency projected growth of 3.83% for 2021, its fastest pace since 2014, citing a "significant recovery" in external demand and as manufacturers move production home from China amid a supply chain reshuffle following Sino-U.S. tensions and the pandemic.

The agency said the coronavirus pandemic has brought strong global demand for electronics, thanks to the growing need for telecommuting to reduce the risk of COVID-19 infections.

Consumption rose 5.16% in the third quarter from a year earlier, partly boosted by government stimulus programmes to counter the pandemic's impact.

Taiwan has not recorded any domestic transmissions of the virus for over 200 days, but the government is watching nervously as imported cases rise, albeit at a slow rate.

While the island has not gone into total lockdown to contain the virus due to relatively successful measures that prevented its rapid spread, the government has repeatedly warned of uncertainty for the economy and is rolling out a stimulus package worth T$1.05 trillion ($36.81 billion).

Taiwan's electronics exports are a bellwether of demand for global tech giants such as Apple Inc.

The statistics agency forecast exports in 2020 would rise 3.84%, and expand 4.59% next year.

($1 = 28.5210 Taiwan dollars)

(Reporting by Jeanny Kao and Yimou Lee; Writing by Ben Blanchard; Editing by Kim Coghill)

By Jeanny Kao and Yimou Lee