Vice premier sees limited fallout from high oil prices

Vice Premier Wu Rong-i (吳榮義) said yesterday that rising international oil prices are not expected to have a significant impact on Taiwan's economic development because the nation's dependence on imported oil has been dropping.

Wu, who served as president of the Taiwan Institute of Economic Research (台經院) before assuming his current post, made the remarks while delivering a speech on the domestic and global economic situations at an annual meeting of the Rotary International Taiwan District 3460.

The momentum of global economic growth is expected to slow due to continued hikes in international oil prices, lower-than-expected growth of the economies of industrialized nations such as Germany, France and Japan, and a tighter monetary policy to be adopted by the US and China, Wu said, quoting the latest report issued by Global Insight Corp.

Despite surging international oil prices, Wu said that while the value of Taiwan's imported oil accounted for 25 percent of the country's total import value in 1980, the ratio had dropped to 8.3 percent in 2003. The value of imported oil as a ratio of GNP, meanwhile, fell from 12 percent in 1980 to 3.7 percent in 2003.

Wu further said that the production value of industries closely related to imported oil accounted for 37 percent of GNP in 1980 and that the figure had dropped to 27 percent in 2003.

Consequently, continued hikes in international oil prices are forecast to have a limited impact on Taiwan's overall economy, Wu said.