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Barclays expects Taiwan's 2015 GDP to grow 4.5%

Barclays expects Taiwan's 2015 GDP to grow 4.5%

Taipei, Jan. 17 (CNA) British banking group Barclays has forecast that Taiwan's gross domestic product (GDP) will grow 4.5 percent in 2015 because of the sustained economic recovery in the United States and a plunge in international crude oil prices. Barclays' forecast was more optimistic than that made by Taiwan's government, which predicted in late November that the country's GDP will grow 3.50 percent year-on-year in 2015. In a research note, Leong Wai Ho, a senior regional economist with Barclays, said the bank had previously forecast that the U.S. economy would grow 2.5 percent in 2015 but had decided to revise its forecast upwards to 3 percent after taking plunging crude oils prices into account. Leong said he expected investment in production equipment in the U.S. to grow 7.9 percent this year, beating the 7 percent increase averaged in the past. Because the U.S. is one of the major buyers of Taiwan's goods, Leong said a general rule of thumb based on historical data is that when the U.S. economy grows an additional 1 percentage point, Taiwan's GDP growth should be raised an additional 0.7 percentage points. Leong said that with U.S. economic growth remaining strong, he was upbeat about Taiwan's economic climate for 2015. According to the Ministry of Finance, the U.S. accounted for 11.1 percent of Taiwan's total exports in 2014. Leong said that plummeting crude oil prices are also expected to spur global consumers to spend and speed up the pace of an investment cycle, favorable circumstances that should benefit the local high-tech sector, the backbone of Taiwan's exports. The economist said that if crude oil prices average US$50 per barrel for the rest of this year, Taiwan should begin to feel the impact of an increase in production and exports in the second quarter. Leong warned, however, that higher interest rates could be on the horizon.
He expected the U.S. Federal Reserve to kick off a rate hike cycle in June after having ended its six-year quantitative easing program in October 2014, and said Taiwan's central bank would likely follow suit at its quarterly policymaking meeting in September. Taiwan's central bank left interest rates unchanged for a 14th consecutive quarter after its latest policymaking meeting in December. (By Lo Hsiu-wen and Frances Huang)


Updated : 2021-09-22 06:37 GMT+08:00