Economists appear divided on the pace of the global slowdown and its effect on the local economy next year. The majority, however, remain skeptical about Fitch Ratings’ recent forecast that the local economy would contract next year.
“It’s a positive move that governments worldwide, including that in Taiwan, have come up with concerted policies or stimulus measures to ward off a recession and help their economies recover in the second half of next year,” Tony Phoo (符銘財), chief economist of Standard Chartered Bank (Taiwan), said by telephone yesterday.
Phoo said that the bank was not planning to revise its latest forecast, released early last month, that the local economy would hit bottom in the second quarter of next year and full-year GDP growth would reach 3.1 percent, up from this year’s estimated 2.8 percent growth.
Cheng Cheng-mount (鄭貞茂), chief economist at Citibank Taiwan Ltd, agreed yesterday, saying he remained relatively optimistic although recent economic conditions had deteriorated more than he expected.
“Due to a higher base in the first half, the economic slowdown is sure to continue its downward trend till the first half of next year,” Cheng said by telephone, “but improvements are likely to accelerate in the second half [of next year].”
Sources have said that Citibank is likely to trim its GDP forecast later this month, but Cheng refused to comment.
The bank said late last month that the local economy would post a GDP growth of 3.6 percent next year, down from an estimated 4 percent this year.
Fitch Ratings on Thursday revised downward its GDP forecast for global economies.
Among Asia-Pacific countries, “Fitch expects negative growth in 2009 for Taiwan, Hong Kong and Singapore and very weak growth in Australia, New Zealand, Japan, Korea and Thailand,” it said in a statement.
Taiwan’s economy could contract by 1.7 percent next year from a previously estimated 4.3 percent growth, while Hong Kong and Singapore could contract by 1.2 percent and 1 percent respectively from previous estimates of 4.5 percent growth, Fitch said.
“This regional slowdown is likely to give rise to higher levels of bad debt than previously expected, compounded by borrower difficulties in accessing credit as banks become more risk averse,” Fitch warned.
Late last month, Du Ying-tzyong (杜英宗), chairman of Citigroup Global Markets Taiwan Ltd, said the local economy might face an uphill battle to meet the IMF’s forecast of a GDP growth of 2.5 percent next year given declining export expansion.
The Directorate-General of Budget, Accounting and Statistics forecast on Aug. 22 that the economy would grow 4.3 percent this year and 5.08 percent next year. The agency is scheduled to update its forecasts next week.
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