Depressed consumer spending following the 921 earthquake, along with continued production difficulties resulting from power rationing and interrupted power supplies, were threatening to put a serious dent in Taiwan's 1999 GDP growth figures, Taiwan Institute for Economic Research (TIER,
To this end, Wu called upon the government to pursue an expansionary monetary policy to boost the economy in the post-quake period.
Wu also said that TIER's investigations had revealed minimal damage to actual manufacturing facilities, even in the industrial parks close to the epicenter.
The danger of a fall-off in domestic consumption existed, Wu claimed, despite the fact that exports have been little affected by the quake.
Analysts have previously noted that strong September export figures, showing 0.9 percent growth year-on-year despite the quake, could well mean that Taiwan would be on track to achieve it's 1999 GDP growth target of 5.5 percent.
The government's official post-quake figure, released by the Directorate General of Budget, Accounting and Statistics, is a quarter percentage point lower than the pre-quake estimate of GDP growth.
September's export growth came despite a serious loss of production at Hsinchu Science-based Industrial Park, amounting to some US$30 million per day of power loss.
TIER will issue its quarterly revision of its 1999 GDP growth estimate next week. According to Wu, it was originally expected that an upwards revision from the 5.34 percent figure released last time would be made, as GDP growth in the third quarter had been much better than originally anticipated. However, following the quake, this upwards revision would be much smaller, Wu said.
Wu would not give any figures to back up his claim about the fall-off in consumer spending, and said that official statistics would not be available for some time.
Instead he quoted anecdotal evidence. "You can see in the papers that there is less advertising, many promotions have been cancelled ... the boss of the restaurant next door is complaining about a lack of customers since the quake ... golf courses are almost deserted," he told the Taipei Times.
However, it would seem unlikely that Wu would be making such a statement based purely on anecdotal evidence, and his evaluation is supported by credit card companies and tourist industry operators, among others, who have complained of a fall-off in spending and a cancellation of tours.
Wu said it would be one month before spending figures from department stores and hotels were available.
Wu also appealed to consumers to keep spending. "Donating to quake victims and normal consumer activities are two separate things. Just because we feel for the victims of the tragedy doesn't mean we shouldn't continue with normal activities," he said.
Wu also said it was a priority to get people back to work in the affected areas, to provide them with a livelihood. To this end he said the restoration of power supplies was crucial.
Looking at the actual damage in the quake area, agriculture was seen as being more seriously affected than industry, according to Ray Dawn (
Nantou County, the most seriously affected area, is predominantly rural. The two industrial parks in the county suffered minimal damage, Dawn said.
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