While the nation is riding on a tide of booming exports, domestic consumption has cooled off substantially, a problem caused by structural factors such as falling birth rates and the exodus of entrepreneurs, and complicated by the credit card storm, economists said yesterday.
Liang Kuo-yuan (梁國源), director of Polaris Research Institute (寶華經濟研究院), said that the nation's birth rate began to fall in 2000, coinciding with the time that Taiwanese businesspeople accelerated their move to foreign countries.
"A smaller population and the absence of a fair portion of rich consumers certainly contributed to the cool-off in domestic consumption," Liang said.
Last month, the government adjusted its full-year economic forecast from 4.31 percent to 4.28 percent, in part to reflect the slow growth in domestic consumption of 1.71 percent in the first half of the year -- the lowest in three years.
While domestic consumption floundered, the nation's trade surplus surged 10.5 percent year-on-year to US$1.21 billion last month. For the first eight months of the year, the trade surplus jumped 71.7 percent to US$10.77 billion from the same period last year, indicating booming exports.
According to Hu Sheng-cheng (
Hu admitted that the domestic market's performance was "far worse than imagined" owing in part to superstitions related to the "Ghost Month" -- a period when many people refrain from buying houses and cars or getting married.
When big-ticket item consumption is low, hopes usually shift to the stock market. However, the local bourse has remained sluggish as investors have adopted a wait-and-see attitude because of the political uncertainty caused by a mass sit-in calling for President Chen Shui-bian (
Hu said that the government has prepared a "grand investment plan" to boost private-sector investment, which he said would help improve the job market and employee incomes, thereby boosting consumer confidence.
Liang, however, noted that the domestic market was cooling to a "severe" extent, citing figures which he said gave him no reason for optimism, such as the average growth rate of 6 percent in domestic consumption between 1991 and 2000, a figure that has since fallen to around 2 percent year-on-year.
He attributed the decline to structural factors that were compounded by the credit card and cash card storm that appeared in the fourth quarter of last year, forcing banks to cut consumer loans, leading to NT$40 billion in "restrained" consumer spending.
Liang referred to South Korea's experience to explain his doubt about a near-term recovery. It took South Korea two years to handle a similar crisis, he said, while Taiwan was just in the third quarter of its crisis, he said.
Besides, he continued, when South Korea was tackling its credit card debts, its housing and stock markets rose, as did its currency's value -- factors which are all missing in Taiwan. He forecast that the impact of card debts on the economy would continue as long as wages and salaries did not rise and other conditions did not improve.
"Probably more than a year from now, when the credit card storm is over, domestic consumption will grow 2 percent year-on-year, " above the current dismal 1.71 percent, he said.
As the government has not publicized details of its "grand investment plan," Liang said it is difficult for him to envision a day when the yearly growth of domestic consumption will return to 6 percent.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last