Cathay Financial Holding Co (國泰金控) yesterday trimmed its economic growth forecast for the nation for this year to 3.2 percent, down from the 3.4 percent it predicted in June, amid signs that exports would lose steam in the fourth quarter.
“Last month, exports reported an annual growth of merely 2 percent, which is a sharp drop from the double-digit increases during the first seven months of the year,” National Central University economics professor Hsu Chih-chiang (徐之強) told an online news conference.
Hsu heads a research team commissioned by Cathay Financial.
Meanwhile, export orders rose at a slower pace last month and totaled only US$54.59 billion, compared with peak of US$62.7 billion in March, Hsu said.
“These signals have prompted concern that exports might slow down in the fourth quarter. Growth could remain in the positive territory, but it would not be double-digit percentage gains,” he said.
The conservative outlook on exports could lead to local makers holding off on new investments, another key reason that Cathay Financial cut its forecasts, he said.
“Imports of capital equipment and semiconductor equipment fell 2.2 percent and 6 percent year-on-year respectively last month, indicating that domestic investments would decelerate in the following months,” Hsu said.
Domestic investment is a major pillar of the nation’s economy, contributing about 70 percent to the first half’s GDP growth of 3.4 percent, Hsu said.
Cathay Financial forecast that the economy would expand 2.7 percent next year, as weak demand might continue to exert pressure on exports and domestic investment.
However, private consumption could rebound strongly because of a low comparison base this year and relaxation of disease prevention measures, Hsu said.
The central bank is expected to further raise its policy rate when it meets in December to contain inflation, he said.
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