October 05, 1999 
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| October 05, 1999 | atimes.com | |
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| China Taiwan's economy won't languish, says S&P HONG KONG - Although several industrial sectors were damaged by Taiwan's massive earthquake, the island's economy will not be badly affected and may even benefit from increased spending in the medium term, Standard & Poor's says. Taiwan's predicted GDP growth is likely to fall only 0.25 percent for 1999 as a result of the disaster, the ratings agency said. As part of the reconstruction process, analyst John Bailey said ''increased government expenditure and investment will provide the impetus for stronger economic growth next year''. Taiwan has little foreign debt and the third-largest foreign exchange reserves in Asia, so will have few problems financing construction with government bonds and budget adjustments. Industries that were affected by the quake include the computer hardware and components sector, and the banking sector primarily, and to a lesser degree, insurance companies. Power outages are currently the biggest barrier to recovery, with some 19,000 factories suffering production losses, which will hurt many of the overeases interests dependent on Taiwanese computer parts. The key petrochemical and steel industries went relatively unharmed, and the latter, along with the construction and cement companies, stands to benefit from the rebuilding period. Property damage, however, will have a serious affect on home owners, and the banks holding their mortgages whose loans are now in question. ''Considering the magnitude of losses, the non-performing loan ratio may rise to 8 percent by next year,'' warned Bailey. Although some panic selling on the stock market may be expected to create losses, the government is expected to intervene through pension and newly established ''stability'' funds. Daily loss limits for individual stocks have also been reduced to 3.5 percent from 7 percent. (Asia Pulse) | |||||||||
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