A local think tank yesterday nudged up its forecast for the nation’s GDP growth because of a better export outlook, but academics voiced concern about the deteriorating employment situation and the lack of international brand names among domestic makers, which they said renders the industry vulnerable to external shocks.
The Chung-Hua Institute for Economic Research (CIER, 中經院), which is conducting a study on the planned cross-strait economic pact, said it expected the economy to contract by 3.56 percent this year, from a decline of 3.59 percent estimated in April.
Wang Lee-rong (王儷容), director of the institute’s center for Economic Forecasting, attributed the upward adjustment to better-than-expected data about the world economy that would help drive economic growth at home.
“The brightening export outlook offsets sluggish private consumption, which has failed to liven up despite the consumer vouchers,” Wang said.
The CIER report said that up to 70 percent of those who received vouchers used them to pay for regular spending, higher than the estimated 50 percent necessary for the measure to be an effective stimulus. The government, which the nation is counting on to drive the economy, has been disappointing in its execution of public works so far, with 80 percent of the funds yet to be tapped in the first quarter, the report said.
“Hopefully, conditions will improve in the coming months,” Wang said. “Otherwise, the contribution [of public spending] to the economy will diminish.”
The report said Taiwan fared worse than South Korea, but better than Singapore amid the downturn, owing to their different degree of reliance on foreign sales.
Chu Yun-peng (朱雲鵬), an economic professor and former minister without portfolio, said the nation should learn from South Korea, which has manufacturers with international brand names, while Taiwanese companies are nearly all original design manufacturers vying for thin profits.
Chu advised local makers to diversify and innovate rather than pin all their hopes on China, saying that warming trade ties with China were positive, but no panacea.
“It is all right to anticipate better cross-strait trade, but the benefits should not be overly inflated,” Chu said.
Wang Jiann-chyuan (王健全), who is CIER vice president, echoed the call for industrial reform.
“There must be reform, even though a drastic one is unlikely, or the nation will suffer when external shocks hit again,” Wang Jiann-chyuan said.
The CIER forecast that unemployment would average a record 5.83 percent this year, further curtailing efforts to spur consumer activity.
The institute also noted a sharp increase in the number of vendors and small shops, which surged by 130,000 and had created more than 190,000 jobs in the last three years.
The phenomenon underlined the rising difficulty in finding work and had prevented the unemployment rate from reaching 7.5 percent, the report said.