WORRIED:A lack of consumer confidence, caused by cross-strait uncertainty, pension reform and labor disputes, is weighing down on consumption, an economist said

Taipei Times
Date: Sep 21, 2016
By: Crystal Hsu / Staff reporter

Despite an uptick in external demand, Cathay Financial Holding Co (國泰金控) yesterday retained its economic growth forecast of 0.8 percent for this year, saying private consumption might disappoint due to strained cross-strait relations.

The nation’s largest financial service provider said that its GDP forecast update factored in a slow, but stable recovery in exports, but the pickup might not be strong enough to make up for a deterioration in domestic demand.

“The slight improvement in exports might not offset the impact of dwindling Chinese tourists on local hotels, restaurants, bus companies and gift shops,” National Central University economics professor Hsu Chih-chiang (徐之強), who led the research team, told reporters.

Exports could continue to recover mildly for the rest of the year, but companies remain conservative about capital spending and consumers are wary of purchasing big ticket items, Hsu said, citing data from different research bodies.