Now that the Olympics have come and gone, Taiwan and China are making plans to resume talks in Taipei at the end of 2008, the result of which would be a boost both economies and the Taiwan-focused exchange traded fund (ETF).

The rumored talks are to hit upon topics such as direct strait-shipping, and cargo flights on a charter basis, along with economic and cultural exchanges, so says the Radio Taiwan International. Potential optimism over these talks led to a big jump in the iShares MSCI Taiwan Index (EWT) on Wednesday – up 3.6%. Year-to-date, the fund remains down by 11.5%.

Meanwhile, Taiwan’s economy showed signs of slowing last month. An index used to study economic performance in the next three to six months is down two-tenths of a percent to 0.4%. The Economic Times says that the government lowered its GDP forecast to 4.3% in 2008, stating that consumption has been curtailed by rising inflation. Taiwan’s export engine will be impacted by the global slowdown.

The country is reliant on export orders, and slowing demand bodes ill for the economy in the third quarter, report Daniel Ong Kian Kong and Alex Pevzner for the Wall Street Journal.

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