Growth was 2.58 per cent year-on-year in the September-December period, the fastest expansion since the first-quarter of 2015 when the economy grew 4.01 per cent.
It was the third consecutive quarter of growth since Taiwan came out of recession in April-June last year.
Traditionally an export-driven technology hub, the island is home to industry giants such as Foxconn and Taiwan Semiconductor Manufacturing Company (TSMC) -- key suppliers for Apple's iPhone.
The statistics bureau said exports in the quarter increased 11.73 per cent -- the most in five years -- driven by a boom in demand for electronics parts.
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TSMC also announced earlier this month better-than-expected earnings in the same period thanks to the launch of the iPhone 7 series.
"Production of electronic components continue to increase, driven by the expansion of smart technology product applications," the Directorate-General of Budget, Accounting and Statistics said in a statement Wednesday.
The number of Chinese visitors has fallen since Beijing-sceptic Tsai was elected last January, with speculation China is turning off the taps as a means of pressure on the Taiwanese leader.
Local tourism operators who once catered to droves of mainland tourists complain of half-empty hotels and tour buses sitting idle.
While tourism to Taiwan from other countries rose 17.47 per cent in the fourth quarter, overall visitor numbers still declined 3.99 per cent.
Analysts are also concerned about whether the strong export demand will continue.
Wednesday's release brings 2016 full-year growth to 1.4 per cent, beating the government's estimate of 1.35 per cent.
It is forecasting economic growth of 1.87 per cent in 2017.
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