Macroeconomic Forecast Recession To Last A While Still

BMI View: Hopes that China may be able to tow Taiwan out of the island's economic predicament have clearly been bolstered by recent agreements signed by the two long-time rivals. To be sure, investors shrugged of the poor first quarter growth number (-10.26% y-o-y) as evidenced by a continued strong rally in the stock market and attendant appreciation of the Taiwan dollar. We do not want to be the proverbial wet blanket, and although we too are very encouraged by the synergistic possibilities brought by the détente with Beijing, we still see tough hurdles in the way of a swift and sustained recovery for the island. As things stand we have not altered our -4.5% forecast for the economy in 2009.

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