Pundits yesterday lauded the government’s latest plan to boost economic growth and consumer spending next year, but said that despite these measures, “it is still too early to tell” if the government would be able to achieve its goal of 4 percent GDP growth next year.
According to economists, such measures would generate a certain level of consumer spending and support certain industries, such as the LED industry.
“The general consensus in the market right now is that global economic growth next year is set to slow from this year, although it’s debatable how steep the downturn will be,” Taiwan Institute of Economic Research (台經院) director Steven Yang (楊家彥) said by telephone.
He cited the government’s subsidy of NT$2,000 (US$66.40) for consumers to replace home appliances next year, saying it was a boon to the public, but people might not rush to buy the appliances unless they felt secure enough about next year’s economic prospects.
“If Taiwanese are wondering if they can keep their rice bowls next year, it will be luxury spending for them to upgrade their appliances, despite the subsidies,” Yang said.
To help Taiwan’s export-reliant economy cope with sluggish demand in Europe and the US, the Cabinet on Thursday approved a plan proposed by the Council for Economic Planning and Development (CEPD).
Under the initiative, the government would focus on stabilizing the financial sector and consumer prices, increasing employment, seeking more local and foreign investment, boosting domestic consumption and pushing exports.
Among the measures are a budget of NT$600 million to provide subsidies of NT$2,000 a person to buy energy-efficient air conditioners, washing machines and refrigerators in the first three months of next year.
The government would also spend NT$2.4 billion to install 320,000 LED streetlights around the country next year, representing a coverage rate of 20 percent in each city and county in Taiwan.
Polaris Research Institute (寶華綜合經濟研究院) president Liang Kuo-yuan (梁國源) said the LED sector was one of the high-tech industries in Taiwan that has been recently battered by the global economic slump, along with the LCD, DRAM and solar energy industries.
Taiwan aims to be a “green country” by promoting the adoption of energy-saving products such as electric vehicles and home appliances, and assisting green energy industries such as LED and solar energy.
Yang said judging from the 20 percent coverage ratio, such installations would be a boon to LED makers as the industry faces issues including a supply glut, as well as unstable and sluggish demand from overseas markets.
“The government is taking the initiative to create demand and help players weather the slowdown,” he added.
However, pundits warned against jumping to the conclusion that these measures would be a “quick stimulus” for the economy and help Taiwan secure GDP growth next year of at least 4 percent, as pledged by CEPD Minister Christina Liu (劉憶如).
“One of the major hindrances will be the macro-economic sentiments,” Liang said. “If the eurozone debt crisis gets any worse, it will be an ‘external shock’ to Taiwan’s exports that will hinder GDP growth.”