Cathay Financial Holding Co. (???), one of Taiwan's leading financial services providers, said Monday that it has raised its forecast for Taiwan's gross domestic product (GDP) in 2017, largely in reflection of a rebound in the country's exports.
Cathay Financial said that the GDP is expected to grow 1.5 percent in 2017, an upgrade from an earlier estimate of a 1.2 percent rise recorded in September.
The financial holding firm said that the momentum of Taiwan's outbound sales started to pick up in the second half of this year on the back of a global economic recovery, in particular after the U.S. economy, the world's largest, showed signs of speedier expansion and the European economy became more stable.
In November, Taiwan's exports rose 12.1 percent from a year earlier to US$25.34 billion, the highest year-on-year growth in 46 months, government data shows.
According to Cathay Financial, Taiwan's exports could rise 2.68 percent in 2017, up from its earlier forecast of a 2.21 percent rise.
Due to an improvement in outbound sales, export-oriented manufacturers could become more active in investment for production expansion, Cathay Financial said. By taking an increase in both private and public investment into account, the firm said that capital formation for 2017 could rise 1.23 percent, up from an earlier estimate of a 1.08 percent increase.
However, economic growth for 2017 could be capped by caution among the public, which could cap private consumption, Cathay Financial said, adding that how the government will carry out its economic policy could be critical to next year's GDP growth.
As a result, the firm said it has left its forecast of Taiwan's private consumption at 1.31 percent unchanged for 2017.
Despite its upgrade of the 2017 GDP growth forecast, Cathay Financial said it remains cautious, since its prediction is lower than the government's estimate.
In late November, the Directorate General of Budget, Accounting and Statistics released its latest forecast, saying that the economy is expected to grow 1.87 percent in 2017.
Cathay Financial said that since the economy is on the rise and the U.S. Federal Reserve is keen to raise its key interest rates next year, the local central bank is expected to start an interest rate hike cycle in the second half of next year.
In a quarterly policymaking meeting held on Dec. 22, the central bank left its key interest rates unchanged for the second consecutive quarter.
Source: Focus Taiwan News Channel