Taiwan's public consumption could register only 1.71 percent growth this year due to credit card debt, although Taiwan is expected to be less affected than South Korea was in 2003, when credit debt cut down consumption growth to a negative figure, economic officials said.
Council for Economic Planning and Development (CEPD) Vice Chairman Thomas Yeh (葉明峰) made the remarks yesterday in response to recent media reports that private consumption had fallen behind the economy in growth and was decreasing by an average of NT$150 billion per year.
According to Yeh, the research shows the slowdown of private consumption from 2001 to last year resulted from a shrinking growth rate in disposable income related to stock devaluation, comparatively lower wages and a higher unemployment rate.
However, while disposable income has so far increased this year, private consumption has still been decreasing in the past three quarters due to factors such as credit card debt and the "double" ghost month in the Chinese lunar calendar, he added.
It is estimated that the fourth quarter will register a higher growth rate of 2.2 percent, accounting for a 1.71 percent annual growth in private consumption, he said.
The figure is optimistic compared to the case of South Korea, he said, noting that growth in South Korea's private consumption was slashed from 7.9 percent in 2002 to 1.2 percent in 2003 and 0.3 in 2004.
Yeh said the government had taken measures to boost private consumption, including regulating the stock market, stabilizing consumption and the financial system, promoting tourism and enhancing business innovation.
To cushion the impact of credit card debt on private consumption, the government has strengthened coordination on reducing credit debt, upgraded the financial system in managing credit risk and offered financial support to owners of small and medium-sized enterprises that fell victim to credit card debt, he added.
Ups and downs
Meanwhile, sales in Taiwan's manufacturing sector amounted to NT$2.78 trillion (US$84.6 billion) in the third quarter of this year, up 9.6 percent from the same period last year, according to tallies released yesterday by the Ministry of Economic Affairs (MOEA).
Of this amount, NT$1.41 trillion were attributed to products for domestic consumption, up 5.82 percent year-on-year and NT$1.37 trillion were attributed to exports, up 13.77 percent year-on-year, MOEA officials said.
For the first nine months of this year, sales in the manufacturing sector were valued at NT$8.03 trillion, up 9.41 percent year-on-year, with products for domestic consumption accounting for NT$4.13 trillion and exports accounting for NT$3.9 trillion, the officials said.
During the same period, vehicle sales experienced the greatest decline at 20.29 percent, followed by 12.63 percent recorded by the clothing industry, 8.52 percent recorded by the leather and fur product industry and 4.67 percent recorded by the plastics manufacturing industry, they said.
The officials said sales of electronic parts and components rose 12 percent year-on-year to NT$707.6 billion in the third quarter, owing to strong demand for consumer electronic products such as liquid-crystal-display TV sets, MP3 players and videogame consoles.
Sales in the textile industry decreased 1.21 percent year-on-year to NT$63.1 billion in the third quarter, mainly because of fluctuations in raw material prices and declining demand for clothing products from the US and Europe, the officials said.