Taiwan Business Forecast Q1 2007

Content

• Chapter 1: Political Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Political Outlook
  • Chen Still Under Fire
  • Recent months have seen several failed attempts by the political opposition to remove President Chen
  • Shui-bian from office Nevertheless, the administration remains tainted by corruption scandals, involving
  • both Chen's top aides and his family We continue to believe that the opposition KMT will perform well in
  • December's mayoral elections and legislative elections in 2007, putting the party in a stronger position
  • to recapture the presidency in 2008
  • Table: The Taiwanese Cabinet - Key Ministers
• Chapter 2: Economic Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Economic Activity
  • Losing Momentum
  • Taiwan's economic growth remains unbalanced, with ongoing political problems exacerbating already weak
  • domestic demand While Taiwan's healthy external sector has been supportive in 2006, export growth has
  • begun to slow, in line with our expectations, and we expect this to moderate further in 2007 as external
  • demand weakens As such, we forecast that Taiwan's real GDP growth will slow to 39% in 2007, and see
  • downside risks to our 45% growth projection for 2006
  • Table: Population And Output
  • Monetary Policy
  • An End To Tightening?
  • Although market interest rates are still extremely low, price pressures in Taiwan have moderated significantly
  • over the past year, with CPI registering negative growth for three consecutive months in August-October
  • As such, with real interest rates now comfortably in positive territory, we believe that Taiwan's gradual
  • monetary tightening cycle has likely come to an end
  • Table: Consumer Price Index And Interest Rates
  • Exchange Rate Policy
  • Pressure on TWD
  • The Taiwan dollar recently bounced back from a period of weakness in July-October, carried by regional
  • currency strength and supported by strong equity inflows, which remain practically the sole domestic driver
  • of currency appreciation While we have pared back our bearish medium-term TWD view, upside potential
  • is limited, due to weakening fundamentals and ongoing political problems We see the unit strengthening
  • mildly to TWD3260/US$ by end-2006
  • Table: Exchange Rate
  • Balance of Payments
  • External Sector Secure
  • While export growth is set to moderate over the coming months, as global demand slows, Taiwan's external
  • sector will remain healthy, and we forecast strong surpluses in both the trade and current account balances
  • for the duration of our forecast period
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Table: Asia Sovereign Ratings - Evolution of Ability to Pay
  • Table: Asia Sovereign Ratings - Evolution of Willingness to Pay
  • BMI Sovereign Ratings Index Methodology
• Chapter 4: Business Environment
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Issues
  • Legal Framework
  • Labour Force
  • Size
  • Table: Demographic Indicators (2005)
  • Table: Employment Indicators
  • Foreign Investment Policy
  • Overview
  • Table: Asia, Annual FDI Inflows
  • Table: Taiwan Annual FDI Inflows
  • Foreign Trade Regime
  • Overview
  • Tax Regime
  • Overview
• Chapter 5: Key Sectors
  • Commercial Banking
  • Key Issues
  • Table: Competitive Landscape Snapshot of Taiwan's Commercial Banks
  • Telecoms
  • Industry Forecast Scenario
  • Table: Taiwan Telecoms Sector Historical Data & Forecasts