World Economy

Fitch Trims Taiwan Growth

Fitch Trims Taiwan GrowthFitch Trims Taiwan Growth

Fitch Ratings Ltd., a major international rating agency, Wednesday revised downward its estimates for Taiwan’s economic growth this year and next year in light of a slowdown in China’s economy.

Fitch now expects Taiwan’s gross domestic product to increase 1.3% in 2015 and 2.4% in 2016, compared with earlier forecasts of 3.8% and 3.5% respectively, CNA reported.

The rating agency also predicted the global economy to grow 2.3% in 2015 and 2.7% in 2016, with China’s GDP growth estimated at 6.8% this year and 6.3% next year.

Fitch has revised its outlooks on Taiwan’s long-term foreign- and local-currency Issuer Default Ratings to “positive” from “stable” and affirmed the IDRs at “A+” and “AA-,” respectively.

The issue ratings on Taiwan’s senior unsecured local-currency bonds are also affirmed at “AA-,” while the country’s ceiling is affirmed at “AA” and the short-term foreign-currency IDR is at “F1.”

Andrew Colquhoun, Fitch’s head of Asia-Pacific Sovereign Ratings, told a press briefing that the revision of Taiwan’s GDP growth is due to the challenges the country is facing with China’s economic slowdown.

The revision of Taiwan’s outlooks to “positive”–indicating a potential upgrade of 50% over a two-year period–reflects the country’s falling government deficit and stabilized government debt, he added.

Fitch does not anticipate significant revisions to the 2016 budget following legislative approval, regardless of whether the opposition Democratic Progressive Party wins the January 2016 elections as widely expected, Colquhoun said.