06.28.2001
Taiwan still has the blues

• Development: The index of leading indicators was down 1.3% MoM in May, the lowest level since 1985.

• Analysis: While macro indicators point to the absence of any sign of recovery in 3Q01, we maintain our 2.4% GDP growth forecast unchanged for 2001. Furthermore, following a 25bp interest rate cut in the US, bringing the US and Taiwan rates in line at 3.75%, we expect Taiwan’s Central Bank (CBC) to follow suit today.

• Primasia View: We think a 25bp rate cut is needed in Taiwan, although the CBC has been more conservative in the past and may well announce a just 12.5bp cut.

IrmakSurenkok@Primasia.com +886-[0]2-2547-8873