Cathay Financial Holding has warned Taiwan that it faces a risk of stagflation as economic growth is predicted to slow down while inflation remains high. Cathay Financial’s research team predicts that GDP will rise 1.8% YoY this year, down from their previous forecast of 2.3% due to weaker global demand. Meanwhile, inflation is expected to increase by 2% this year. National Central University economics professor, Hsu Chih-chiang, warned that this year’s GDP growth could be slower than inflation, which could be a sign of stagflation. If Taiwan enters stagflation, it would be the worst since the 2008 global financial crisis, Hsu said. With high inflation persisting, the central bank is unlikely to cut rates anytime soon.
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