Taiwan’s economy is likely to see moderate growth of between 3.5 percent and 4 percent next year, because demand from China might mitigate the pain of a flagging West that is struggling to avoid a double-dip recession, Fubon Financial Holding Co (富邦金控) said yesterday.
“It will take some time for the US job market to show concrete improvements and Europe to recover from its sovereign debt crisis,” Fubon Financial chief economist Rick Lo (羅瑋) said.
Next year is set to see advanced economies on the brink of recession, while emerging economies would continue to grow, albeit at a slower pace, Lo told a media briefing.
Much hinges on when world leaders find a lasting solution to the eurozone debt problem and how, the economist said.
The first quarter is critical, as a significant amount of European debt is due to mature between February and April, he said.
Against this backdrop, Taiwan’s export-oriented economy might expand between 3.5 percent and 4 percent next year on the back of replacement demand for tablets, personal computers, handsets and other electronics, Lo said.
The nation’s second-largest financial service provider predicted that China, which accounts for more than 40 percent of Taiwan’s exports, might provide some buffering against a slowdown with GDP growth of between 8.5 percent and 9 percent next year.
Beijing would continue its efforts to rein in housing prices next year, but might relax credit a bit for corporate lending now that inflationary pressures have showed signs of stabilizing and the global economy is stalling, Lo said.
The trend would limit the growth of the US currency which has benefited recently from risk aversion, Lo said.
“We expect the local currency to average NT$29.8 against the greenback next year, trading within the range of between NT$28.5 and NT$30,” he said.
Taiwan’s central bank, which halted tightening monetary policy in June, may keep the benchmark rediscount rate at the current 1.875 percent next year, Fubon Securities Investment Services Co (富邦投顧) vice president Julia Chen (陳艾儒) said.
The rate may be cut to 1.5 percent if the economy and the job market fare worse than expected.
“Consumers will cut their spending if more companies use unpaid leave to cope with falling orders,” Chen said, adding that it is important to see if the situation deteriorates in the next two quarters — the low season for most technology firms.
The TAIEX could fluctuate between 6,800 points and 8,800 points next year in the absence of major mishaps at home and abroad, Fubon Securities president Charles Hsiao (蕭乾祥), said yesterday.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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