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Citigroup trims Taiwan's GDP forecast, expects rate cut

Citigroup trims Taiwan's GDP forecast, expects rate cut

Taipei, Oct. 21 (CNA) Citigroup said Thursday that it has cut its forecast for Taiwan's gross domestic product (GDP) growth for 2015 and anticipates that the local central bank will lower its key interest rates again by the end of this year. Citigroup said that Taiwan has felt the impact of weakening global demand and slowing domestic demand, so the U.S.-based banking giant trimmed Taiwan's GDP growth for this year to 1.5 percent from an earlier estimate of a 2 percent increase. Citigroup tends to be more upbeat about Taiwan's economy than other institutions. Its forecast was higher than a recent estimate made by the Chung-Hua Institution for Economic Research (CIER, ???) last week, which lowered its prediction to 0.9 percent from 3.04 percent, citing disappointing export performance. The CIER is the first institution to lower Taiwan's 2015 GDP growth forecast to less than 1 percent at a time when many market analysts have raised concern that it is not easy for the country to maintain its economic growth at a 1 percent pace. Citigroup said that Taiwan's domestic demand has been affected by a slowdown in local industrial production, while a stagnant local financial market has also had an adverse impact on the local economy. On Wednesday, the Industrial Economic and Knowledge Center under the government-sponsored Industrial Technology Research Institute (??????????????) released a forecast saying that the production value of Taiwan's manufacturing sector could fall 7.36 percent year-on-year in 2015, the steepest drop since 2009. Despite a cut in Taiwan's 2015 GDP forecast, Citigroup has left its estimate of the country's economic growth for 2016 at 2.4 percent. Citigroup said that as the government is studying the feasibility of launching measures to stimulate the local economy, the local central bank is likely to cut interest rates again in the next quarterly policymaking meeting scheduled for December. In the last policymaking meeting held in late September, the central bank trimmed interest rates by 0.125 percentage points. It was the first time the central bank had cut interest rates to push the local economy ahead after leaving them unchanged for the past 16 quarters. Citigroup said that while some foreign investors have been moving funds into Taiwan, the Taiwan dollar could continue to weaken at a mild pace against the greenback in the wake of the unfavorable local economic climate. The banking group said that non-economic factors resulting from the upcoming presidential election are also expected to keep the Taiwan dollar cheaper. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-19 22:59 GMT+08:00