The result of Taiwan's general election, which made the DPP the largest political party in the Legislative Yuan, is likely to bring welcome relief to the nation's gloomy economy, analysts said yesterday.
The DPP-led Chen Shui-bian (
They said negotiation is likely to replace squabbling in a legislature previously controlled by the KMT.
"The DPP should now be able to implement its policies more smoothly and with closer cooperation from lawmakers," said Wu Chung-shu (吳中書), an economic researcher at the Academic Sinica.
"The Chen administration is under tremendous pressure to turn around the economy, as it only has two more years in office to address the problem. My guess is that it will waste no time in pushing for finance and economy related bills," he said.
Wu added, however, that with no one party commanding a majority in legislature, it might take time for the DPP to forge a workable coalition.
Saturday's poll saw the KMT lose a majority in legislature for the first time in Taiwan's modern history, with the pro-reunification People First Party (PFP) increasing its clout in the chamber.
The DPP won 87 seats in the 225-member legislature, with 13 going to its ally, the Taiwan Solidarity Union (TSU). The KMT won 68 and the PFP 46.
Wu said the new political landscape would help gross domestic product grow 3 percent next year, following a 2 percent contraction this year.
Taiwan's GDP shrunk 4.21 percent in the three months to September, the biggest quarterly fall in 26 years, government statistics showed.
With both the executive branch and the legislature singing in harmony, economic policy-making is expected to improve, analysts said.
"Cooperation between the administration and legislature can strengthen the formation and implementation of policies," said Bentham Hung, a researcher at Fuh-Hwa Securities Investment and Trust Corp (
Political turmoil coupled with a stalemate in relations with China over the 18 months have accelerated the the domestic economy's downturn, he said.
Ultimately, however, any economic turnaround would most likely be powered by an upturn in the global economy, he said.
Domestic problems requiring prompt solutions are soaring unemployment, poor asset quality at financial institutions and the over-crowded banking sector, Wu said.
Other problems include economic relations and financial cooperation with China, WTO entry and its inevitable impact on the agricultural sector, deregulation in the financial sector and a sluggish property market, he said.
"The government has to find a way to lower the jobless rate, because a lot of other social problems derive from this situation. About 20 of the 225 members of the legislature are economic and financial experts, and I believe that they should be able to put together something that is workable to help the economy," Wu said.
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