Cathay Financial Holding Co (國泰金控) yesterday lowered its forecast for the nation’s GDP growth this year from 1.8 percent to 1.3 percent — its second downward revision this year — due to weak exports, slowing capital equipment imports and sagging private investment.
Despite the strength of domestic consumption, monetary tightening by central banks and economic headwinds in China have reduced demand worldwide, unfavorable to Taiwan’s export-reliant economy, National Central University economics professor Hsu Chih-chiang (徐之強) said.
Hsu heads a research team commissioned by Cathay Financial.
Photo: Wu Hsin-tien, Taipei Times
The probability of GDP growth this year falling to between 0.9 percent and 1.9 percent is about 80 percent, Hsu said, citing the research team’s estimate.
The central bank last week cut its forecast for the nation’s GDP growth this year from 1.72 percent to 1.46 percent, while the Directorate-General of Budget, Accounting and Statistics last month trimmed its forecast from 2.04 percent to 1.61 percent.
Hsu said the economy still has a chance of coming out of the woods in the fourth quarter, driven by an improvement in the manufacturing sector’s inventories, increased demand for consumer electronics during the peak season and demand for artificial intelligence-related goods.
Next year, the economy is forecast to expand by 2.9 percent, with an 80 percent probability that GDP growth would reach between 2 percent and 3.9 percent in the year, he said.
The central bank is not expected to raise its policy rates this year after pausing again at its quarterly board meeting last week, as service inflation is subsiding in Taiwan, and an end is in sight for the US Federal Reserve’s rate hike cycle, the research team said.
As Taiwan’s full-year economic growth is estimated at 1.3 percent this year and lower than that of the US and China, such situations are rare and thus a continued rate pause by the central bank is warranted, even if the consumer price index rises more than 2 percent this year, Wu said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS