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Protests against trade pact may slow domestic recovery: Morgan Stanley
Central News Agency
2014-03-31 01:42 PM
Taipei, March 31 (CNA) A two-week student-led protest against a trade-in-services agreement with China may adversely affect public sentiment and domestic market recovery, according to the U.S. brokerage Morgan Stanley. On March 18, hundreds of protesters stormed the Legislative Yuan and have since been occupying the main chamber, demanding that the government renegotiate or reject the trade-in-services agreement, which is a follow-up accord to the cross-strait Economic Cooperation Framework Agreement (ECFA). Though the protest has had limited direct impact on Taiwan's economy so far, it would affect public sentiment and domestic recovery if it continues, said Jason Liu, a Morgan Stanley analyst in Hong Kong. "We think the bigger concern is the impact on sentiment, particularly if the student protests last for some time," Liu wrote in a recent note to clients. He said Taiwan's domestic demand -- including consumption and investment -- rebounded strongly in the fourth quarter of 2013, and boosted economic growth. "However, the protests and the delay of the ECFA could affect sentiment in the business community and among consumers, given the rising uncertainty over cross-strait policies," Liu warned. If the demonstrations are symptomatic of public sentiment, then any policy execution by President Ma Ying-jeou's administration on cross-strait ties or the domestic economy may encounter public resistance over the next two years, the analyst said. Taiwan has begun a long process of opening up its economy, but such sentiments could delay or actually stall this process, Liu noted. Last week, Bank of America Merrill Lynch said Taiwan's 2014 gross domestic product (GDP) growth may be capped at 2.5 percent if lawmakers failed to pass the cross-strait services agreement. The bank had previously given an estimate of 2.9 percent growth. According to projections by Chung-Hua Institution for Economic Research (CIER), the trade-in-services agreement will raise Taiwan's GDP by 0.03 percent and create 12,000 jobs over a period of 10 years. (By Jeffrey Wu)
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