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Interest rates to rise next year: Morgan Stanley

Helen Qiao, Greater China chief economist at Morgan Stanley, yesterday stated that interest rates in Taiwan are expected to trend upwards toward the end of next year.

As economic conditions improve in Taiwan, interest rates will begin to climb in the third quarter of next year, said Qiao. The institutional investor also anticipates Taiwan's economy to grow at a pace of 3.4 percent, a figure much more favorable than market expectations. Qiao attributed the upbeat outlook to growing consumer demand in the domestic market, and developing markets abroad. Domestic consumption is expected to grow by 1 percent next year, propelled by a rise in high-end merchandise spending and a stabilizing job market.

According to Qiao, Taiwan is well positioned to benefit from the expected rebound in global economic conditions. On the labor market, Qiao stated that while Taiwan is plagued by a long persisting stagnation in wage levels, enterprises did not initiate large-scale layoffs. She also downplayed the looming specter of the impending end of the Fed's quantitative easing measures, saying that concerns over the matter have already been reflected in the markets earlier in July.

Qiao however, stated that she did not rule out the possibility that economic growth may plummet below the 2-percent benchmark as seen in the current year.

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