Tue, Mar 17, 2015 - Page 13 News List

Cathay Financial raises economic forecast to 3.5%

UNCERTAINTY:Cathay’s new forecast still lags the government’s projection given concern over private investment, with January-February imports falling

By Amy Su  /  Staff reporter

Cathay Financial Holding Co (國泰金控) yesterday raised its economic growth forecast for the nation for this year to 3.5 percent from the 3.22 percent it estimated in December last year, citing strong demand at home and abroad.

Cathay Financial’s 3.5 percent growth forecast is lower than the Directorate-General of Budget, Accounting and Statistics’ projection of 3.78 percent GDP growth, reflecting its concern over the nation’s private investment environment.

“Continuous monetary easing by major economies and rising consumer confidence in Taiwan are the two major factors behind the upward adjustment in GDP growth,” Central University economics professor and Cathay Financial research team coleader Hsu Chih-chiang (徐之強) told a media briefing.

Hsu said that a recovering European economy would boost external demand for Taiwan-made products, while improvements in the local job market and salaries would lend support to private consumption.

In addition, if global crude oil prices were to average US$50 per barrel this year, they could help lift Taiwanese GDP growth by 0.06 to 0.1 percentage points, Hsu said.

Compared with forecasts from the government and other research institutes, Cathay Financial was more cautious about the growth momentum of private investment this year, following a 13.2 percent year-on-year decline in imports in the first two months of the year.

“Weak imports in the first two months, including that of capital equipment, and next year’s presidential election might both be signs of uncertainty in companies’ investment plans in Taiwan for the whole of this year,” Hsu said.

The research team set its interval forecast for the nation’s economic growth this year at between 3.1 percent and 3.9 percent.

Given mild inflation, the central bank is likely to keep its policy rate unchanged in the first half of the year, but interest rates could increase slightly later this year following potential rate increases in the US, Hsu said.

The research team expected the government’s new plan to raise taxes for homeowners to further slow the rising pace of property prices, without a risk of a hard landing for the housing market.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top