Potential trade partners have adopted a “wait-and-see attitude” toward talks with Taiwan because of the fierce protests against the cross-strait service trade agreement, Minister of Economic Affairs Chang Chia-juch (張家祝) said yesterday, without providing specifics.
Many of the bilateral trade negotiations scheduled for this year have been put on hold, Chang told a joint meeting of the finance and economic committees at the Legislative Yuan.
Chang confirmed the concerns of some legislators that protesters who have occupied the main chamber of the legislature to oppose the ratification of the pact with China could have a far-reaching adverse effect on the nation’s economic development.
Taiwan’s foot-dragging in approving the service trade pact with China has called into question Taipei’s follow-up talks with Beijing on merchandise trade and dampened other countries’ enthusiasm in holding similar talks with Taiwan, Chang said.
However, he did not identify any of the trade partners holding back on talks with Taiwan, nor did he provide specifics on whether the reluctance has been ongoing or surfaced only recently after the protesters occupied the legislature on March 18.
Singaporean Prime Minister Lee Hsien Loong (李顯龍) on Tuesday called the pact with China a “good deal” and said it would be a pity if Taiwan did not sign it, Chang said, adding that it was advice the nation should heed because Singapore knows the important role trade agreements play in national development.
On Tuesday, South Korea concluded a free-trade agreement with Australia, which is Seoul’s 49th trade pact with other countries and poses a big threat to Taiwan because South Korea is one of the nation’s major trade rivals, Chang said.
While the government and some advocates view the service trade agreement as a long-term positive, the deal’s outcome will have limited impact on the the economy in the short term, UBS Securities Asia said.
The pace of the global recovery remains the most important driving force for Taiwan’s exports, UBS economist Silvia Liu (劉醒威) said yesterday in a report.
“We continue to expect a moderate export recovery in Taiwan despite the somewhat weaker growth momentum in the developed markets over the past couple of months,” Liu said.
In addition, UBS Securities expects capital expenditure to finally recover in developed markets, which could benefit Taiwan given its high exposure to the capital spending cycle in mature economies.
Fixed investments in equipment may more than double to 7.5 percent in the US this year, from 3.1 percent last year, boding well for capital goods imports from abroad, Liu said, adding that capital goods account for more than 40 percent of total exports from Taiwan.
Taiwanese exports of capital goods have improved in tandem with developed markets since the second half of last year, a trend that should become more evident as capital spending in the US and Europe gains further traction, she said.
UBS forecast that the economy would grow 4 percent this year, which is lower than the estimate of 4.5 percent it made in January.
The brokerage said the New Taiwan dollar could weaken slightly against the greenback this year, trading at NT$30 by the end of the year, compared with NT$29.95 late last year.
The US Federal Reserve’s continued tapering of quantitative easing fuels expectation of a strong US dollar, while Taiwan’s large current account surplus and optimism over the stock market outlook will provide a footing, Liu said.
Bucking most other forecasts, UBS Securities sees room for the central bank to raise interest rates once or twice this year, if the economy stabilizes and external uncertainties fade as expected.
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