Pundits expect a stable economy

An increase in jobs and a declining unemployment rate, coupled with strong private investment and public expenditure, should help boost GNP per capita to US$14,961 this year, the highest figure in the nation's history, from US$13,995 per capita last year, according to DGBAS.

Considerable private investment and spending will further sustain economic strength. According to Academia Sinica, private investment for next year will reach NT$1.5 trillion, up from NT$1.39 trillion last year, and consumer spending will also surge from NT$6.38 trillion to NT$6.54 trillion this year.

Therefore, even though the new year is expected to see a significant economic slowdown, economists said the government and people need not to panic or become depressed.

"The economy is returning to the fundamentals rather than being influenced by non-economic factors," TIER President Wu Rong-i (吳榮義) said.

Wu said that what South Korea did to revive its economy after the Asian financial crisis in 1998 is a good example to Taiwan.

Wu Chung-shu agreed, saying that the South Korean government had tried to boost its economy through consumer spending with easy lending, but the result was a consumer-credit bubble that burst in early 2003.

"Instead of intervention to pump up the economic growth rate like in South Korea, the government should put its efforts into improving the investment environment," Wu said.

"The economy has its cycle that goes up and down from time to time ... the important thing is to store energy during the downturn to fuel the next big jump," he said.

Against this backdrop, a stable cross-strait relationship is key to the nation's prosperity. China has become Taiwan's largest trading partner, with trading volume mounting to US$50.5 billion for the first 10 months of last year, a 36.6 percent increase from a year ago. But Beijing recently decided to enact anti-secession legislation that may hurt business ties between the two sides.

Another suggestion is to end the long-standing political confrontation between the two major political camps at home, Academia Sinica President Lee Yuan-tseh (李遠哲) said last week.

Lee urged the two camps to seek reconciliation and press through bills and laws -- such as Amendments to the Resolution Trust Committee Fund Regulatory Provisions (金融重建基金條例), the Land Tax Law (土地稅法) -- that will improve the nation's economy.