News
 

Cathay Financial raises Taiwan's 2021 GDP forecast to 3.2%
 

12/26/2020
 

Taipei, Dec. 26 (CNA) Cathay Financial Holding Co., one of the leading financial holding firms in Taiwan, has raised its forecast for Taiwan's gross domestic product (GDP) growth for 2021 to 3.2 percent, citing an improvement in domestic demand as a driver to the growth.

Cathay Financial said it has upgraded Taiwan's 2021 GDP by 0.3 percentage points from its previous estimate made three months earlier, adding that there is an 80 percent chance for the growth to range between 2.5 percent and 4.0 percent.

The estimated 3.2 percent growth forecast by Cathay Financial was shy of a November government forecast in which the Directorate General of Budget, Accounting and Statistics (DGBAS) said Taiwan's economy would grow 3.83 percent in 2021.

In 2020, Cathay Financial said Taiwan's GDP growth will hit 2.4 percent, an upgrade of 0.7 percentage points from its previous estimate, in the wake of a better-than-expected export performance in the third quarter. The DGBAS has forecast that the country's economy will grow 2.54 percent this year.

Cathay Financial said that since more and more countries will administer vaccines to fight the COVID-19 pandemic, global demand is likely to revive in 2021, while Taiwan's economy will get a boost from recovering domestic demand at a time of an expected increase in foreign arrivals, with the presence of the vaccines.

According to Cathay Financial, Taiwan's private consumption will grow 3.80 percent in 2021, compared with the DGBAS's expected 4.04 percent, and capital formation will grow 2.50 percent, compared with the DGBAS's 3.19 percent.

Meanwhile, Cathay Financial has anticipated Taiwan's exports for 2021 will grow 4.33 percent in 2021, beating the DGBAS's expected 3.38 percent, while the country's imports will grow 4.40 percent, compared with the DGBAS's forecast of 3.36 percent.

Despite the upgrade in the 2021 GDP growth forecast, the financial holding firm said the effectiveness of COVID-19 vaccines remains to be seen, while an uneven recovery in the global supply chain is expected to create uncertainty in the global economy throughout the year.

In addition, Cathay Financial said tensions between the United States and China is expected to impose risks on the global economy next year, Cathay Financial said.

But, the bright spot was that ample liquidity in the global market and rising demand for emerging technologies, such as 5G applications, artificial intelligence and high performance computing devices, is expected to lend support to the economy, Cathay Financial added.

The central bank, Cathay Financial said, is expected to maintain a loose monetary policy and leave its key interest rates unchanged in the first quarter of next year for the fourth consecutive quarter, with a discount rate of 1.125 percent, the lowest in the country's history.

 

(By Wu Chia-jung and Frances Huang)

 

Link, https://focustaiwan.tw/business/202012260013

 

Ufficio di Rappresentanza di Taipei - Viale Liegi n.17, 00198 Roma | Tel. 06-98262800 - P. Iva 97076980586