Thu, Oct 17, 2019 - Page 12 News List

Group paints grim picture for economy

CALL FOR ACTION:The government must find ways to help local firms maintain competitiveness, or repatriating companies might seek new homes, Rick Hsu said

By Crystal Hsu  /  Staff reporter

A major trade group yesterday painted a grim picture for the nation’s economy this quarter and beyond after the IMF trimmed its outlook for global GDP growth, including Taiwan, for the fifth time in a row.

The Third Wednesday Club (三三會), whose member companies have combined annual revenue of US$673 billion, said that the economic scene ahead remains rugged, with major economies locked in trade disputes.

Rick Hsu (許勝雄), chairman of the club and head of Compal Electronics Inc (仁寶電腦), made the remark in reply to media queries about the IMF’s downgrading of Taiwan’s GDP growth projection from 2.5 percent to 2 percent this year and to 1.9 percent next year.

The reduction is in line with the IMF’s expectation that the global economy might grow an estimated 3 percent this year, down from 3.2 percent it predicted in July, and the weakest since 2008, due mainly to global trade tensions, which have induced a broad deceleration in major economies, including the US, Europe, China and India.

“The IMF has a dimmer view of global trade volume, which might squeeze 1.1 percent growth” this year, far lower than the previous forecast of 2.5 percent, Hsu said, adding that the situation is unfavorable for export-oriented Taiwan.

Although the US and China last week agreed to shelf tariff hikes on consumer electronics devices, their disputes over trade imbalances and technology hazards remain, he said.

The US also has a trade row with Europe, while Japan and South Korea have their own frictions, Hsu said.

These cover more than 80 percent of the destinations for Taiwanese exports, he added.

While the government has encouraged Taiwanese firms to diversify exports to Southeast Asia and India, Hsu said that India, whose government is seeking foreign investment, remains inadequate in terms of infrastructure.

A lack of free-trade agreements between Taiwan and its trading partners would mean less competitive terms for local firms, he said, adding that the Regional Comprehensive Economic Partnership (RCEP) is to become functional next year.

RCEP member nations account for a population of 3.4 billion people with a combined GDP of US$49.5 trillion, making it the world’s largest economic bloc.

“The government has to think hard about how to help local firms stay competitive,” Hsu said.

Otherwise, Taiwanese companies that are moving production out of China to avoid US tariffs might be forced to relocate again to survive, he said.

However, the Directorate-General of Budget, Accounting and Statistics (DGBAS) remains confident that the nation’s economy would expand more than 2 percent this year.

DGBAS Minister Chu Tzer-ming (朱澤民) yesterday told a legislative hearing that the economy would expand 2.46 percent this year, citing a forecast made by the agency in August.

Asked by Democratic Progressive Party Legislator Wu Ping-jui (吳秉叡) why there is a gap between the IMF’s and DGBAS’ forecasts, Chu said the agency’s forecasts are more accurate, because it has more precise data on the nation’s economy than the IMF.

The government’s forecast of 2.46 percent growth was based on an improving domestic economy in the first and second quarters, Chu said.

The DGBAS has forecast that the economy would grow 2.67 percent and 2.9 percent in the third and fourth quarters respectively.

Additional reporting by CNA

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