Cathay Financial Holding Co (國泰金控) yesterday halved its GDP growth forecast this year for Taiwan from 1.6 percent to 0.8 percent, due to expectations of continued weakness in exports and economic growth recovery around the world.
The revised figure is lower than the 1.06 percent growth forecast by the Directorate-General of Budget, Accounting and Statistics (DGBAS) last month.
“We hold a more reserved outlook on the nation’s GDP growth in light of consecutive double-digit declines in exports during the January-to-May period,” said Hsu Chih-chiang (徐之強), an economics professor at National Central University and a leader on the Cathay Financial research team.
“While the DGBAS gauged the nation’s economic contraction in the first quarter at 0.1 percent, our findings suggest a 0.5 percent dip,” Hsu said, adding that the 0.8 percent growth for this year would require growth of at least 2 percent in the second half.
The World Bank and the IMF have slashed global economic growth this year to 2.4 percent from 2.9 percent and from 3.4 percent to 3.2 percent respectively, in light of less-than-expected growth momentum in both developed and developing economies, Hsu said.
However, the worst of the downturn might be approaching its end for Taiwan, as signaled by the National Development Council’s monitoring indicators, which last flashed a sluggish “yellow-blue” in April, ending a 10-month streak of recession “blue.”
Taiwan’s GDP growth in the third quarter is anticipated to recover slightly to 0.26 percent, as export order volume visibility in South Korea, Taiwan and China have shown slight upticks.
Taiwan’s central bank is also expected to remain dovish, in line with continued easing policies implemented by its peers in South Korea and Japan, increasing the likelihood of a weakening New Taiwan dollar, the economics team said.
Despite the reserved outlook, the economics team has set the GDP growth range at between 0.6 percent and 1.1 percent, adding that there is little chance of contraction.
Public confidence in the nation’s economy this month reached the highest in the past year, Cathay Financial’s monthly survey showed.
Although the reading remained low, the economic optimism index rose to minus-8.5 this month, rebounding from minus-23.7 last month, while readings of optimism on wage growth and employment have also shown upticks.
Optimism this month on the TAIEX’s performance and risk appetite has also risen to a new high in the past year at minus-13.3 and minus-9.8 respectively, with a majority of 45.7 percent of respondents expecting the local bourse to peak this year at 8,400 to 8,800 points, the survey showed.
STEPPING UP: The firm has also asked employees to work in split shifts from this week and to halt all but essential overseas business travel from next month Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has implemented a remote work policy for employees not on production lines in an attempt to curb the spread of COVID-19, the world’s largest contract chipmaker said yesterday. This is the first time in the Hsinchu-based company’s history that it has launched a large-scale remote work policy, joining global technology companies, such as Apple Inc and Google, that encourage employees to work from home. The chipmaker has also asked employees to work in split shifts from this week, it said. As the number of virus infections continues to climb worldwide, TSMC has urged employees to halt unnecessary
A two-hour drive south of Amsterdam in Veldhoven, workers decked out head-to-toe in protective gear toil in vast assembly halls. Before entering the inner sanctuary of the facilities, they meticulously layer on masks, gloves and special socks. A single speck of dust or a hair can have devastating effects on production. The result of all this painstaking process is an environment that is 10,000 times more purified than outside. As COVID-19 grips the world, it might just be the safest place to work right now. The teams belong to ASML Holding NV, which holds a de facto monopoly on the industry of
DBS Bank Ltd yesterday hacked its GDP growth forecast for Taiwan this year to 0.9 percent, down from its estimate of 2.3 percent two months earlier, in light of the COVID-19 pandemic and increasing financial market volatility. The bank’s latest forecast was even lower than London-based IHS Markit Ltd’s estimate of 1 percent, while other research institutes’ projections range from 1.6 percent to 2.6 percent. Taiwan’s economic momentum is being negatively affected by the pandemic, DBS said. The rapid spread of the disease from Asia to Europe and the US has dampened the bank’s previous expectation of a “V-shaped” global rebound in the
DOWNSIDE RISKS: Firms have a ‘very low’ chance of boosting investment returns in the next two years, making it hard for them to improve their capitalization, an analyst said Taiwanese life insurers wanting to improve their capital structure face strong headwinds this year, given prolonged low interest rates and economic impacts derived from trade protectionism and the COVID-19 pandemic, Taiwan Ratings Corp (中華信評) said on Friday. The local life insurance sector also still has high asset risks and such risks are susceptible to market volatility, the local arm of Standard & Poor’s Global Ratings said. Since last year, major financial holding companies — including CTBC Financial Holding Co (中信金控), Cathay Financial Holding Co (國泰金控) and Shin Kong Financial Holding Co (新光金控) — have announced plans to raise fresh capital to