Fri, Apr 30, 2010 - Page 1 News List

ECFA predicted to have limited impact this year

PREDICTION MARKET Bidders thought it 78 percent likely that unemployment would remain above 5 percent at the end of this year

By Ko Shu-ling  /  STAFF REPORTER

Most Taiwanese think signing an economic cooperation framework agreement (ECFA) with Beijing will do little to improve the economy and lower unemployment, but the trade deal is likely to boost the stock market, a prediction market said yesterday.

On a scale from NT$0 to NT$100, the probability that an ECFA would boost the TAIEX if it were signed is NT$75, according to bidders, National Chengchi University’s Center for Prediction Market said.

In other words, share prices on the fifth day after the proposed accord is signed are likely to be higher than those on the last trading day before it is signed, the center said.

Bidders also predicted that the odds of the TAIEX reaching 10,000 points this year were 33.3 percent if the ECFA is signed and only 15 percent if it is not.

“In other words, the ECFA would likely have very little impact on the TAIEX reaching 10,000 points this year,” the center said.

The probability that per capita GDP would exceed US$18,000 this year after an ECFA is signed was 12.2 percent, against 10 percent if it was not signed. The center said the prediction suggested that an ECFA would make a limited contribution to Taiwan’s economic growth.

Official statistics showed that Taiwan’s per capita GDP was US$16,442 last year.

The Directorate-General of Budget, Accounting and Statistics has forecast that the figure will jump to US$17,660 this year.

While Premier Wu Den-yih (吳敦義) has vowed to keep the unemployment below 5 percent this year, bidders predicted that the prospect of unemployment exceeding 5 percent in December was 78 percent.

On an ECFA’s impact on Taiwan’s bid to sign free-trade agreements (FTA) with other countries, the center said trading on the issue was insignificant so it was hard to analyze.

However, judging from similar trade pacts, the odds that Taiwan would ink an FTA with either Japan, the US, EU or ASEAN countries this year were between 3 percent and 17 percent, the center said.

The administration hopes to ink the cross-strait trade deal before July, so bidders predicted that the likelihood the planned pact would become a reality during the second quarter was 50 percent. The prospect fell to 31 percent during the third quarter and 9 percent for the fourth quarter.

Meanwhile, Mainland Affairs Council Deputy Minister Liu Te-shun (劉德勳) yesterday brushed aside Beijing’s political rhetoric about an ECFA, emphasizing the pact was economic in nature.

The council said Beijing’s political position or proposal was consistent and understandable, but had no relation to the ECFA negotiations.

“We hope [China] will empathize with us because we also have a political position,” he said. “There must be room for both sides to work together.”

Liu made the remarks in response to a statement by Wang Yi (王毅), director of China’s Taiwan Affairs Office, on Wednesday, urging the two sides to jointly oppose “Taiwan independence” and insist on the so-called “1992 consensus.”

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