The nation’s economy will likely expand to more than 8 percent for the full year — the highest in 20 years — if the government signs a trade agreement with China in the next quarter, Cathay Financial Holdings Co (國泰金控) said yesterday.
“An economic cooperation framework agreement [ECFA] with China will boost domestic investment and consumption, and significantly raise this year’s economic growth,” Cathay’s newly appointed chief economic adviser Kuan Chung-ming (管中閔) told a media briefing.
Based on strong first-quarter economic performance, this year’s GDP is likely to surpass 7 percent and even exceed 8 percent following the signing of an ECFA, beating a record 7.88 percent set in 1992, Kuan said.
Cathay’s GDP forecast was the highest among economic research institutes at home and abroad, including the government’s revised estimate of 6.14 percent and the IMF’s forecast of 6.5 percent.
In its first monthly GDP forecast, the financial company said the economy would grow 0.13 percent this month, 0.21 percent next month, 0.19 percent in August and 0.16 percent in September.
Cathay’s monthly GDP forecast is made based on seasonally adjusted economic data by the Directorate-General of Budget, Accounting and Statistics and the Council for Economic Planning and Development’s leading economic indicators.
Kuan said the European sovereign credit crisis had not had much of an impact on Taiwan’s economy, as its major exporting markets are China, the US and Southeast Asia. Rather, the weakening euro could increase the competitiveness of Germany and France and alleviate economic pressure in the debt-ridden eurozone.
Remaining relatively upbeat about the economy in the near future, Cathay said the economy was expected to grow 1.1 percent this quarter and 0.54 next quarter. That compared with government forecasts of 2.34 percent and a 0.67 percent decline respectively.
The company attributed its economic growth prediction to the nation’s strong international trade and growing consumption momentum and domestic investment.
However, Kuan said the pace of economic growth would gradually decelerate throughout the year, adding that there was an 81 percent chance that the economic climate turned “cloudy” from “clear” last month and a 75 percent chance that it would remain “cloudy” this month.
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