Cathay Financial Holding Co (國泰金控) yesterday cut its GDP growth forecast for Taiwan from 2.4 percent to 2.1 percent for next year, amid concern over a continued slowdown in China.
“China remains the largest source of uncertainty for Taiwan and its influence has surpassed the US and the eurozone,” said National Central University (國立中央大學) economics professor Hsu Chih-chiang (徐之強), one of the leaders of the Cathay Financial research team.
China-related growth or policy shocks are the primary contributing factor to emerging markets, followed by capital flows or a broader balance of payments deterioration, US policy uncertainty and fallout from geopolitical risks, Hsu said, citing a study by State Street Global Markets.
Despite the US Federal Reserve’s decision to raise policy rates gradually and at small increments, Hsu retains a positive outlook on the change.
Local interest rates are expected to remain low, while the New Taiwan dollar is likely to remain weak in response to continued interest rate cuts by the Chinese central bank, as the link between the two economies deepens.
As a result, following the Taiwanese central bank’s two rate cuts this year, it is likely to slash its policy rates by another half a basis point next year in the face of low inflationary pressure, Hsu said.
“While the central bank’s rate cuts might not bring tangible growth to the real economy, it is a short-term measure that will stem further declines,” he said.
Hsu is not expecting major long-term policies to be enacted before the end of the first half of next year, while a caretaker government remains in power.
The current economic cycle likely hit the trough either in the third or fourth quarter this year, with the length of the contraction likely extending to 15 months this time compared with an average of 11 months in previous cycles, Hsu said.
Growth prospects are expected to remain gloomy until the first quarter next year, dragged down by diminished private consumption due to a listless job market, he said.
Next’s year’s tepid expansion would be backed by an anticipated 4.37 percent increase in exports. Export growth this year is projected to come in at just under 1 percent, the company said.
Cathay Financial chief investment officer Sophia Cheng (程淑芬) urged investors to take note of widening volatility next year, and advised against betting on currencies.
For this quarter, the company said the economy is poised to shake off a weakness that has persisted in the second and third quarters, and expand by 0.43 percent.
That would bring full-year economic growth to 1.02 percent, Cathay Financial said, down from its previous forecast of 1.07 percent.
Just a few years ago, the millennial generation — generally defined as those born from the early 1980s through the mid-1990s — was synonymous with youthful rebellion. However, now, as the millennials ease into early middle age, they are finding their path out of their parents’ basement to be a lot harder than it was for earlier generations. The fundamental problem is that millennials are not building wealth. The wealth of the median US household headed by someone 35 or younger has actually shrunk in inflation-adjusted terms since the mid-2000s, even as the wealth of older Americans has continued to grow. An
‘LITTLE CHOICE’: The airline said it expected only about 8,000 of its 29,000 employees to be working by next month, but hoped to have 21,000 in the next two years Qantas Airways Ltd plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs as Australia’s largest airline tries to survive the coronavirus pandemic. Qantas yesterday announced a plan to reduce costs by billions of dollars and raise fresh capital. The plan includes grounding 100 planes for a year or more and immediately retiring its six remaining Boeing Co 747 planes. Chief executive Alan Joyce said the airline has to become smaller as it braces for several years of much lower revenues. He said the furloughed workers faced a long interruption to their airline careers. “The actions that we’re taking
Apple Inc’s decision to stop using Intel Corp processors in its Mac computers and switching to its own chips might benefit Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and boost Taiwan’s high-tech exports, Australia and New Zealand Banking Group (ANZ) said in a note on Tuesday. The US tech giant announced the “Apple silicon” initiative at its annual Worldwide Developers’ Conference, which started on Monday. The company said the first Mac powered by its own chips would debut by the end of this year and all product lines might shift to the new architecture in the next two years. TSMC is likely to
EXPERIMENTAL DRUG: While news about a COVID-19 vaccine is more eye-catching, developing a treatment would be more viable, the Senhwa boss said Senhwa Biosciences Inc (生華科) aims to raise NT$1.5 billion (US$50.57 million) by issuing 15 million new common shares in the third quarter of this year to fund the research of new drugs, including the experimental drug Silmitasertib for the treatment of COVID-19, the company said on Monday. That would be the firm’s largest fundraising effort after it raised more than NT$1.4 billion from an initial public offering on the Taipei Exchange (TPEX) in April 2017, chief financial officer Sarah Chang (張小萍) told the Taipei Times by telephone. The price of the new shares would depend on the firm’s average share price