MasterCard Worldwide lowered its forecast for Taiwan’s GDP to minus 2.7 percent this year, down from 2 percent predicted last June on falling exports, a predicament that may ease in the second half.
The multinational credit card company advised Taiwan to cut its dependence on exports and strengthen its service sectors to lift its economy, which MasterCard said it expected to post a slow recovery in the second half.
The financial turmoil eroded global equity value by US$21 trillion, or 40 percent of the world’s GDP since the end of 2007, Yuwa Hedrick-Wong (王月魂), chief economist at MasterCard Asia-Pacific, told a news conference in Taipei yesterday.
“Taiwan’s economy is expected to contract 2.7 percent this year” on slumping demand for its goods, a predicament that is exacerbated by the nation’s dependence on the China market and over concentration of its manufacturing industry, Hedrick-Wong said.
Outbound shipments in machinery, chemicals, precision instruments and basic metals shrank up to 46 percent in November alone, the economist said.
He projected that Hong Kong and South Korea would decline 1.7 percent and 1.5 percent, respectively, during the same period, while Singapore would suffer the biggest drop of 3 percent among the “four little tigers.”
Hedrick-Wong said Taiwan could start to recover from the global recession in the second half, along with the US, where business investment would fuel economic momentum as US consumers have started saving money.
Under the current trend, Taiwan and other emerging markets can not expect to export their way out of the slowdown as they did in 1997, the economist said.
Rather, he said the nation should draw up a new industrial strategy with a focus on the market of Chinese tourists.
Chinese tourists contributed US$5.1 billion, or 1.4 percent, to Taiwan’s GDP in 2007, while they accounted for 8.5 percent and 18 percent of the GDP for Japan and Hong Kong, Hedrick-Wong said.
“Taiwan under performs in tourism given its potential,” he said, addings that Chinese tourists stayed an average of 6.4 days in Taiwan and 3.6 days in Hong Kong in 2007.
Altogether, Chinese tourists made 15.4 million trips to Hong Kong but 320,000 trips to Taiwan in 2007, the economist said, recommending that the government seek to lure rich Chinese in Shanghai where per capita income has hit US$12,000 a year.