Economists say rebound may be near

Economists yesterday were optimistic that Taiwan is heading toward a "V-shaped" economic recovery next year.

"We've been at the bottom for a while. So, it's definitely going to be a big V-shaped [recovery]," said Wu Hui-lin (吳惠林), an economist at the Chung-Hua Institution for Economic Research.

Citing the Council for Economic Planning and Development's measure of economic health as a reference, Wu said the figures indicate the Sept. 11 terrorist attacks in the US had limited impact on Taiwan's economy since October indicators bounced back to "normal."

Minister without Portfolio Hu Sheng-cheng (胡勝正) also said that Taiwan is likely to see its economy growth curve go upward "somewhere between the end of the first quarter and early second quarter next year.

"It will become clearer when we see exactly how many orders Taiwan's high-tech industry receives a month from now," Hu said.

The US economy -- especially the high-tech sector -- will be a major force behind Taiwan's economic recovery, he said.

Moreover, both Wu and Hu said that the public's confidence in the domestic economy has improved significantly following a rebound in the TAIEX, a jump in consumer sales and a renewed interest in the property market.

Confidence also may have gotten a boost after elections early this month altered the political landscape in the Legislative Yuan.

A Citibank analyst, who requested anonymity, said yesterday that "following the TAIEX rebound in November, an economic recovery is expected at the end of the first quarter next year."

Although the TAIEX performance only reflected Taiwan's capital overflow, there has still been strong support based on fundamentals, he said. But, as for a V-shaped recovery, he said it would hinge on whether corporate earnings reports -- to be released at the end of January -- live up to expectations.

Regardless of US economic influence on Taiwan, Wu said the nation would still encounter some "economic bubbles" in the future as Taiwan's foreign reserves still showed abundant market capital.

"The stronger the market mechanism is, the greater the chances for economic recovery," Wu said. He also urged the government to refrain from interfering in market mechanisms.

Yiping Huang (黃益平), Asia-Pacific analyst for Salomon Smith Barney in Hong Kong, said Taiwan will benefit greatly from a US-led recovery.

"We are bullish about the US economy next year ? we are expecting a full recovery in the second quarter," Huang said.