`Misery index' for Taiwanese remains high for entire year

An economic report concluded that Taiwan's financial "misery index" (金融痛苦指數) has exceeded that in countries such as the US, Japan and South Korea.

"For the past two years, Taiwan has been suffering from a great deal of financial distress," said Cheng Chen-mount (鄭貞茂), a researcher from the Taiwan Institute of Economic Research. Cheng updated a report on the index yesterday.

Taiwan's year-on-year financial misery index, which includes the decline of local stock prices and the NT dollar, reached a high point last year.

Taiwan's stock prices declined by 39.1 percent last year, while the NT dollar depreciated 8.3 percent against the US dollar, resulting in a 47.4 percent increase in the index.

"The lack of economic confidence has made people wonder whether a global economic recovery will ever arrive," Cheng said. "Fears of terrorist acts, which were rekindled on Sunday, may further drain consumer and business confidence around the world, creating added drag on the domestic economy."

But equity and foreign-exchange markets in the US and Japan have performed worse than those in Taiwan during the last few months, he said.

Nevertheless, Taiwan's misery index for the past nine months has remained at 35.1 percent. Although the index looks better when compared to the US' 21.6 percent, Japan's 13.3 percent, Singapore's 12.17 percent and South Korea's 10.95 percent, as of last Friday.

Cheng said that there aren't any short-term measures that can be taken to resolve Taiwan's financial problems, adding that the current economic cycle will need to run its course.

Huang Da-yeh (黃達業), a professor of finance at National Taiwan University, said that the misery index may reach a record-high this year.

Ongoing problems with the high rate of non-performing loans and bad loans in the financial sector are serving a drain to increased business activity.

He also attributed the rising misery index to capital flight to China and economic bubbles in the local property and stock markets.

"The government needs to revise its cross-strait trade polices, alleviating Taiwan's over-dependence on China," Huang said.

PFP Legislator Christine Liu (劉憶如) attributed the current plight to declining competitiveness.

"My greatest worries have been that when the world's economy will improve and Taiwan's economy may continue to slip, leaving us out of a global economic turnaround," Liu said.

She said that falling foreign investments indicated that multinationals were heading directly to China, and no longer investing in Taiwan.