Mon, Jun 08, 2009 - Page 12 News List

Economic slowdown should ease later this year: CEPD

SPECULATION: The central bank governor said that a regional currency similar to the euro could protect smaller economies from currency speculators

STAFF WRITER, WITH CNA

The nation’s economic slowdown is expected to gradually ease in the second half of this year as several international forecasting organizations have predicted that the global economy will bottom out in the fourth quarter, the Council for Economic Planning and Development (CEPD) said yesterday.

Major economies experienced a huge slowdown and soaring unemployment in the first quarter of this year compared with the fourth quarter of last year because of the impact of the global financial crisis, the CEPD said.

The global economy is widely expected to bottom out in the fourth quarter of this year and to rebound next year as the measures taken by the governments, including efficient inventory management, relaxed monetary policies and economic stimulus packages, take effect, the CEPD said.

As for Taiwan, its economy shrank by a record 10.24 percent year-on-year in the first quarter of this year, due mainly to declining exports and investments during the global financial crisis, the CEPD said.

Taiwan’s exports and production continued to slump in April, signs that the economy is still in recession, but the decline of the economy appears to have slowed, the CEPD said.

Despite a drop in the unemployment rate in April, the national job market remains challenging, the CEPD said.

However, the country’s consumer confidence index went up for the third consecutive month last month, the stock market has risen more than 25 percent so far this year, and the New Taiwan dollar has jumped to its highest level in more than five months against the US dollar, the CEPD said.

These are all indicators of growing confidence in the economy among foreign investors and the public, the CEPD said.

In its outlook for the year, the CEPD said the pace of economic decline in Taiwan will gradually slow in the second half of this year thanks to a Chinese economic stimulus plan aimed at expanding domestic demand and thanks to the increased stability of the US economy.

Other factors include an expected influx of capital because of the increasingly warmer cross-strait relations, the anticipated effects of the implementation of public construction projects in the last six months of the year and the development of six emerging industries to boost Taiwan’s competitiveness, it said.

However, the swine flu, or A(H1N1), outbreak could be an uncertain factor in Taiwan’s economic recovery — even though the flu situation is stabilizing — because the possibility of an epidemic in the autumn and winter seasons this year cannot be ruled out, the CEPD added.

ASIAN DOLLAR

Meanwhile, an Asian dollar would help cut transaction costs in the Asia-Pacific region and prevent smaller economies in the region from being harmed by international currency speculators, central bank Governor Perng Fai-nan (彭淮南) said yesterday.

Perng made the comment yesterday while receiving an honorary doctorate degree from National Taipei University.

He said that if some Asian countries that share a similar degree of economic development and that frequently do businesses with each other were to develop and use a common currency similar to the euro, international currency speculators could not attack these economies easily.

Perng lauded the New Taiwan dollar’s exchange rate, saying it was stable since its effective exchange index was moving around a 36-month average.

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