It will be difficult for Taiwan to secure an economic growth rate of 4 percent for this year if global oil prices continues to maintain its current high level, an expert said on Saturday.
Liang Chi-yuan (
It is necessary for the government to take precautions and it should never underestimate the great impact of high oil prices on the domestic economy, Liang said.
According to Liang, when the price of oil increases by 10 percent in the domestic market, the price of petroleum and coal products will surge by 10.73 percent, while prices of electrical and electric engineering machinery -- two of Taiwan's major export items -- will rise by 0.24 percent, further slashing their already weak export competitiveness in foreign markets.
A 10 percent oil-price rise in the home market will take a toll first on the transportation and warehousing industries and second on the electricity and gas, mining and construction sectors, he said, adding that this will drag down the country's economic growth rate by 0.27 percentage points.
If oil prices jump by 18 percent, they will drive the domestic economy down by 0.478 percentage points, he said.
The current high price of oil, at around US$60 per barrel, is a result of profiteering, and is by no means a supply-demand issue, he added.
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