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Cathay Financial raises Taiwan 2018 GDP growth forecast to 2.8%
 

2018/09/29

 

Taipei, Sept. 29 (CNA) Cathay Financial Holding Co., one of the largest financial holding firms in Taiwan, has raised its forecast for the country's gross domestic product (GDP) growth for 2018 to 2.8 percent, citing better-than-expected growth in the first half of this year.

Cathay Financial raised its forecast significantly from the previous estimate of a 2.3 percent increase made in June, making it more upbeat about local economic recovery than other institutions.

The central bank has forecast that Taiwan's economy will grow 2.73 percent in 2018, with the Directorate General of Budget, Accounting and Statistics (DGBAS) at 2.69 percent and the Yuanta-Polaris Research Institute at 2.6 percent.

Cathay Financial said that due to solid global demand, Taiwan's exports, which account for about 60 percent of the country's GDP, grew 5.9 percent in the first eight months from a year earlier, pushing up the local economy.

The financial firm said strong global demand could continue to support Taiwan's economic recovery for the rest of this year.

According to Cathay Financial, Taiwan's merchandise and service exports for 2018 are expected to grow 3.96 percent in 2018, higher than the forecast of a 3.35 percent increase made by the DGBAS.

Cathay Financial said private consumption in 2018 is expected to grow 2.33 percent, compared with the DGBAS's 2.47 percent, and private investment is expected to rise 3.88 percent, compared with the DGBAS's 4.58 percent.

With growth of the major economies in the world having reached a peak, the pace of the global economic growth has been moderating, which could slow Taiwan's economic growth, Cathay Financial said.

It said it has forecast that Taiwan's GDP growth for 2019 will hit 2.2 percent, compared with the central bank's 2.48 percent and the DGBAS's 2.55 percent.

Cathay Financial said the global economy is expected to feel the pinch of an interest rate hike cycle carried out by the U.S. Federal Reserve and rising trade friction between the United States and China, which could send ripples through the financial markets around the world.

Although Cathay Financial has expected a slower economic increase in 2019 for Taiwan, there is still room for the central bank to raise its key interest rates, since local interest rates have been too low.

On Thursday, the central bank announced that it was leaving interest rates unchanged for the ninth consecutive quarter in the third quarter of this year, with a discount rate of 1.375 percent.

(By Tien Yu-pin and Frances Huang)

 

Link, http://focustaiwan.tw/news/aeco/201809290010.aspx

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