Taipei, March 18 (CNA) Cathay Financial Holding Co. (國泰金), one of the leading financial holding firms in Taiwan, has raised its forecast of Taiwan's gross domestic product (GDP) for 2017 to 2.1 percent, citing an improvement in exports amid recovering global demand.
Cathay Financial said that Taiwan's GDP is expected to grow 2.1 percent in 2017, up from a December forecast of a 1.5 percent growth.
The latest forecast by Cathay Financial was more upbeat than the government's prediction. In mid-February, the Directorate-General of Budget, Accounting and Statistics raised its forecast of Taiwan's 2017 GDP growth to 1.92 percent from an earlier estimate of 1.87 percent.
Cathay Financial said that with the United States, China and the eurozone showing signs of a faster pace in economic recovery, Taiwan has been benefiting from rising demand in the global market.
Taiwan's exports, which account for about 60 percent of the country's GDP, are expected to rise 3.82 percent year-on-year in 2017, Cathay Financial said. The latest estimate was raised from the previous forecast of 2.68 percent growth.
Taiwan's exports for February soared 27.7 percent from a year earlier to US$22.66 billion, recording year-on-year growth for the fifth consecutive month.
The financial holding firm said that it has also raised a prediction of Taiwan's import growth to 3.05 percent from a 2.21 percent increase as many manufacturers have been purchasing more capital equipment to expand their production capacity and meet global demand.
Led by rising exports, Cathay Financial said, Taiwan's capital formation for 2017 is expected to increase 1.65 percent from last year, an upgrade from an earlier estimate of 1.23 percent.
Cathay Financial said that local private consumption for 2017 could grow 1.63 percent from a year earlier, up from an earlier forecast of 1.3 percent, but will stay below the average of a 2.08 percent increase in the past five years, indicating that consumer sentiment remained cautious.
According to Cathay Financial, the local economic composite monitoring indicator and the leading economic leading indicator released by the National Development Council have been growing in a stable manner, pointing to an uptrend in the economic fundamentals.
In January, the composite monitoring indicator rose 1 point from a month earlier to 29, the highest since August 2014, while the leading index for January stood at 101.76, up 0.37 percent from a month earlier, marking the 11th consecutive month of increase.
With a recovery in the economy, Cathay Financial said, Taiwan's inflation could remain stable and the consumer price index is expected to rise more than 1 percent this year.
(By Tien Yu-pin and Frances Huang)