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Cathay forecasts '14 GDP growth at a strong 2.93%

TAIPEI, Taiwan -- Economists at Cathay Financial Holdings Co. (國泰金控) yesterday announced that Taiwan's gross domestic product (GDP) is forecast to grow at a pace of 2.93 percent in 2014.

The figure is more optimistic than the 2.59-percent GDP growth rate forecast by the government's Directorate-General of Budget, Accounting (DGBAS, 主計處).

According to the company, Taiwan is poised to benefit from improving global consumer demand in the European and U.S. markets. The company, however, stated that growth in developing markets may be hampered by expectations that the U.S. Fed will taper the scale of ongoing quantitative easing (QE) measures. In addition, despite anticipated improvements in market conditions worldwide, Taiwan is still plagued by lagging economic confidence, which, coupled with a stagnant labor market, may stifle domestic consumption levels.

Taiwan's economic climate in the first quarter is expected to be “temperate,” signifying a slow but steady recovery, said Cathay Financial economists. There is still more than a 30-percent chance that the island's economic climate will see “overcast” conditions, signifying persisting stagnation, said economists. Fortunately there is virtually no chance for “downpour” conditions, which represent recession in the coming year, according to economists.

In the financial markets, the company is expecting the TAIEX to continue to swell based on its stellar performance over the third quarter of this year on rising investor confidence, favorably low interest rates and a weakening New Taiwan dollar.

The company outlined decisive factors that may affect the course of economic growth next year, including seven-in-one elections to be held toward the end of 2014, the ramifications of QE tapering, impending inflation concerns, and the outcome of ongoing economic reforms in China. The company also pointed to the possibility that the Taiwan government may curb its own stimulus policies and lingering structural issues within the eurozone as significant issues among the list of long-term concerns casting gloom over chances of economic recovery.

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