Taiwan's economic recovery may slow as a dispute over the presidential election continues to trigger mass protests and threaten spending and investment, economists said.
"This is a clear risk, and my fear is whether the street protests will evolve into unrest," said Dong Tao, chief economist at Credit Suisse First Boston in Hong Kong, who currently forecasts that Taiwan's growth will almost double to 6.2 percent this year.
"We are monitoring the situation very closely," he said.
The two-week-old election deadlock is prompting consumers to hold off on home purchases and is also deterring visitors to the country. That may dampen an expected rebound in an economy where growth slowed to 3.2 percent last year from 3.6 percent in 2002.
Economists including Tao, ABN Amro Asia Ltd's Eddie Wong and Robert Subbaraman of Lehman Brothers Japan Inc said they didn't plan to cut their 2004 Taiwan growth forecasts.
"A lot depends on how long it goes on for and how the political situation plays out," said Subbaraman, who currently expects Taiwan's economy to grow 6 percent this year.
"We have a downward bias on the forecast because of the political situation," he said.
The impasse is hurting Taiwan's property market. Apartment sales fell by about half in the week following the election from the week before, said Victor Chang (
The construction index, which tracks 28 property and construction stocks, has declined 9 percent since the election, compared with a 2-percent drop for the TAIEX overall. Before the vote, construction and property were the best-performing industry groups this year, gaining 65 percent.
Commercial property values may also rise less than was expected this year, said Andrew Liu (劉學龍), managing director of CB Richard Ellis, the world's biggest commercial property broker, in Taipei.
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