Taiwan’s economy is forecast to suffer zero growth this year as a result of deteriorating economic conditions at home and abroad, a private economic think tank said yesterday.
The domestic economy — affected by worsening unemployment, declining exports and shrinking consumption — might not bottom out until next year, said Liang Kuo-yuan (梁國源), president of the Taipei-based Polaris Research Institute (寶華綜合經濟研究院).
Liang said the Directorate General of Budget, Accounting and Statistics was too optimistic when it forecast in late November that the economy might secure year-on-year growth of 2.12 percent this year.
He said as the unemployment rate continues to climb, exports decrease and the global economic downturn deteriorates, the domestic economy might post zero growth this year — assuming there was no actual negative growth.
“Most of the people in Taiwan will face economic prospects this year as grim as they were last year and some should prepare for poorer livelihoods, as the nation faces an even worse unemployment crisis,” Liang said.
Liang said some of the more optimistic economists think the global economy might pick up steam beginning in the fourth quarter of this year, while others believe the downturn will bottom out next year, but that the most pessimistic think the global economic recession will continue for at least another four years.
He said that unlike before, where downturns ended in a “V” shape, the current global economic turmoil would lead to a “U” shape downturn in which it would remain at rock-bottom for a longer period.
He said that while he hoped government efforts to invigorate the domestic economy would be successful, consumers would be advised to keep higher levels of cash reserves on hand so that they can ride out the recession longer.