Cathay Financial Holding Co (國泰金控) yesterday said that the nation’s economy would grow 2.93 percent next year, but added that the public may not feel the benefit of the increase as manufacturers fill their export orders abroad.
The forecast is better than the 2.59 percent forecast by the government last month, thanks to higher external demand from the US, Europe and China, Cathay Financial said.
Hsu Chih-chiang (徐之強), an economics professor at National Central University, who co-headed the quarterly research with Cathay Financial, said exports would grow 4.43 percent next year — stronger than the 3.41 percent estimated by the Directorate-General of Budget, Accounting and Statistics last month.
The New Taiwan dollar is likely to weaken further against the US dollar in the next six months after the US Federal Reserve starts to taper its quantitative easing, said Hsu Shih-hsun (徐士勛), an economics professor at National Chengchi University.
A weaker currency is more favorable for exports and the economy as a whole, as evidenced by Japan’s economic reform, he said.
The NT dollar yesterday fell for an 11th straight session against the greenback, ending down NT$0.03 to close at NT$30.039.
However, the public may not fully appreciate the pickup as the ratio of overseas production keeps climbing, hitting 53.7 percent of overall output last month, Hsu Chih-chiang said.
Taiwan may see low GDP growth in the coming years given the difficulties in revamping industry and the increasing lack of competitiveness among domestic technology firms, he said.
“It will be difficult for GDP growth to reach above the 3 percent level” unless the government is ready for bold reforms, he added.
The financial sectors should be given more flexibility to diversify their product lines so they can account for a bigger chunk of GDP, which is currently at about 6 percent, compared with 9 percent in 2000, Cathay Financial chief investment officer Sophia Cheng (程淑芬) said.