TAIPEI — The downward cycle of the economy is likely to hit bottom in the first quarter of 2012, with the European debt crisis remaining a key factor in any economic rebound, a Citigroup analyst said yesterday. “Based on the current trend of the global economy, it is highly likely that the economy will hit bottom in the first quarter of next year,” Cheng Cheng-mount, chief economist at Citigroup in Taipei, said at a seminar organized by the Council for Economic Planning and Development (CEPD). “The European debts will remain a key factor governing whether prospects will pick up in the second quarter,” Cheng said.
“But, if Europe’s maturing debt obligations cannot be handled smoothly, the second quarter may not be as bad as the first, but there will still be some economic corrections,” he added. He said domestic demand in Taiwan is also likely to cool down in 2012 and that the range of the slowdown will depend on the local jobless rate and the government’s fiscal stimulus plans.