Merrill Lynch raises Taiwan's 2009, 2010 GDP growth rates

Analysts at the securities giant also predicted that the Central Bank of China in Taiwan is unlikely to raise interest during the whole year of 2010, although it will come under greater pressure from the wider anticipation for appreciation of Asian currencies.

Taiwan's economy will continue benefiting from the strong demand from China and improving relations across the Taiwan Strait.

The steady improvement in the U.S., European, and Japanese economies next year will also be among the major factors for the upward adjustment in the forecast for tie strong swing into the positive territory for the island's GDP growth in 2010, they said.

Concerning the performance of the local bourse, Merrill Lynch noted that the V-shaped rebound in the overall business conditions had already been reflected in the sustained rise in Taiwan share prices.

However, Merrill Lynch analysts still keep their fingers crossed over the development of Taiwan's mid-term economic conditions due to some weaker links in the whole picture, including he continuing lackluster performance of the job market.

The possible absence of vigorous global economic recovery could prompt the Central Bank here to follow other central bankers to keep the low interest rate policy intact at least until the end of next year, they forecast.

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