If Taiwan is serious about raising its competitiveness in the region, the government should introduce more stimulus measures to boost the economy and better execute its plans, a senior economist at Barclays PLC said in Taipei yesterday.
Leong Wai Ho (梁偉豪), a senior regional economist with the British banking group, made the comments after cutting his forecast for Taiwan’s GDP growth to 2.2 percent last week, from 3 percent, because of a softer first half.
“Taiwanese policymakers should try harder to grow the pie” before worrying about how to pursue better balanced distributions of wealth as it is trailing South Korea, Hong Kong and Singapore in terms of competitiveness, Leong said.
Toward that end, the government needs to set up a larger task force in formulating industrial and economic development plans and speeding up construction of the “free economic pilot zones,” the MRT extension to Taiwan Taoyuan International Airport and the Taoyuan Aerotropolis, he said.
The free economic pilot zones, in particular, would facilitate the return of Taiwanese firms overseas if they can really hire up to 40 percent foreign workers in the zones as labor costs are surging in China, Leong said.
“Niche products made in Taiwan would be very popular in China, which is transforming from a world factory to a mass market with rapid GDP growth despite a slowdown,” he said.
The benefits of the economic zones may not be evident in the near future, but they could become medium and long-term economic drivers, Leong said.
The government should also take the lead and spend more on public construction, with borrowed money if necessary, to encourage the private sector to do the same, he said.
Taiwanese private firms are being cautious about expansion despite a fair global economic landscape, he said.
Barclays forecast an export surge in the fourth quarter — if not in this quarter — when local technology companies in the consumer electronics supply chain will benefit from the launch of new-generation devices.
“Talks of the end of the quantitative easing [QE] would be groundless if the US economy is not on course for a gradual and steady recovery,” Leong said. “In my view, global markets assign too much attention to the QE exit and overlook positive economic data.”
Furthermore, debt-ridden Europe is likely to start emerging from a recession this quarter, he said.
The backdrop suggests more upside surprises than downside risks for Taiwan’s export-oriented economy, he said.
Barclays may raise the nation’s GDP growth forecast for this year to between 2.5 percent and 2.7 percent if exports resume their growth momentum, Leong said.