Economics<br/>Issues in Focus<br/>China Economics: 2009 Outlook Upgrade on<br/>Stronger-than-expected Policy Responses<br/>We upgrade China’s 2009 GDP growth forecast to 7.0%<br/>from 5.5%, based on much stronger-than-expected<br/>policy responses that have boosted confidence and thus<br/>effectively prevented a potentially more severe<br/>slowdown in private consumption and investment in<br/>1Q09.<br/>Hong Kong: A Repeat of the SARS Outbreak?<br/>We believe the negative impact from the current swine<br/>flu outbreak on the Hong Kong economy will be smaller<br/>compared to the SARs epidemic in 2003. However, this<br/>outbreak will undoubtedly dampen the pace of recovery<br/>from the ongoing global recession.<br/>Taiwan: NT$ Appreciation<br/>We have turned positive on NT$ and asset prices in<br/>Taiwan due to repatriation of overseas Taiwanese<br/>capital as well as Chinese capital inflow.<br/>NT$ appreciation is not merely a recovery, but is a<br/>re-rating event. Given ample liquidity, low interest rate<br/>and rebound in confidence, asset price reflation should<br/>be on the way.<p>China<br/>2009 Outlook Upgrade on Stronger-than-expected Policy<br/>Responses<br/>4<br/>“Worse” in 1Q09, But Not as Bad as Expected 10<br/>PBOC Monetary Policy Statement 14<br/>Hong Kong<br/>A Repeat of the SARS Outbreak? 15<br/>Taiwan<br/>NT$ Appreciation 17<br/>For</p><p><br/></p>