The magnitude 8.9 earthquake that devastated northeastern Japan on Friday will only have a short-term impact on global stock markets, including Taiwan’s, Taiwan Stock Exchange chairman Schive Chi (薛琦) said yesterday.
Schive said the disruption on global bourses caused by the quake would last only about two days.
“Global capital markets may be in for a sharp correction after being hit by news about the disaster, but it will get back on track in a day or two,” Schive told reporters.
Wayne Liaw (廖文宏), chairman and managing director of Bank of America Merrill Lynch Securities (Taiwan) Ltd, said that he was still betting on Japan’s long-term economic prospects and dismissed concern over the quake’s short-term negative impact.
“It is undeniable that a great deal of resources and time will be required for reconstruction after the earthquake, and Japan’s economy will be dampened in the short to mid-term,” he said.
“However, Japan’s economy has shown signs of a slow recovery in the past two years and we are still upbeat about its long-term growth,” he said.
The quake will have a limited impact on Taiwan’s GDP growth this year, Council for Economic Planning and Development Minister Christina Liu (劉憶如) said.
“The impact on the nation’s economy will not be full-scale, because the quake did not affect all Japanese companies that supply key components to Taiwanese firms,” Liu said.
Taiwan’s semiconductor, flat-panel and automobile companies are likely to be more affected because they are more dependent on component supplies from Japan, Liu said.
However, Taiwan should learn from this experience that it should not rely heavily on a single country, she said.
“We have to change our economic structure to lessen the impact of natural disasters occurring in countries that provide a large part of our supply,” Liu said.
As for the global economy, Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) president David Hong (洪德生) said global business sentiment might turn more pessimistic after the quake, but the impact would be temporary, unless problems at Japan’s nuclear power plant turns worse.
TIER does not plan to cut its forecast for Taiwan’s GDP growth because the earthquake will not seriously hurt demand for Taiwanese goods, Hong said.
TIER projected that Taiwanese GDP would expand 4.12 percent year-on-year this year.
However, the quake will eventually drive up oil prices on the back of rising demand for petrochemical products as Japan shifts its focus away from nuclear energy after the quake, Hong said.
“Crude oil prices might slide in the short term as [post-quake] Japanese demand takes a hit due to the fire in the refinery of Cosmo Oil Co, the fourth-largest oil company in Japan. However, it will pick up in the long term with Japan’s rising demand [for petrochemicals] after the explosions at [one of its] nuclear power plants,” Hong said.
Benchmark crude for delivery next month dropped below US$100 a barrel on the New York Mercantile Exchange yesterday, sliding for a second consecutive day after the massive quake spawned a tsunami that ravaged Japan’s northeast, exchange data showed.
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