Last week, a CLSA Asia-Pacific Markets report said Taiwan’s economy would shrink 11 percent this year, which not only represents a substantial downward revision from the foreign brokerage’s previous forecast of a 2.7 percent contraction, but would also make the nation the worst performer among major economies in Asia.
Taiwan, like its rivals in the region, depends on a prosperous world market for information-technology products and other items that support its economy. It is clear that the global downturn will have an adverse impact on the country.
If CLSA’s projection of an 11 percent GDP contraction materializes, it would be a new low after Taiwan recorded declines of 2.17 percent in 2001 and 1.38 percent in 1974 because of the oil crisis that year.
But, since the forecast is by far the most pessimistic among all predictions made by either local or foreign institutions, it soon raised eyebrows among government officials and economists. The nation’s top economic planner, the Council for Economic Planning and Development — which targets 2.5 percent economic growth for Taiwan this year — criticized the CLSA figure as “exaggerated” and “ridiculous.”
The government’s latest forecast predicted GDP growth would be 2.12 percent this year. Its statistics bureau will disclose the growth figure for the final quarter of last year and its projection for this year on Feb. 19, after it said in November that the economy shrank 1.02 percent from a year earlier in the third quarter, the first contraction since 2003.
Many economists have recently adjusted downward their predictions in response to the deteriorating global downturn. But the great uncertainties about the impact of global financial turmoil have made it even harder than usual for economists to offer accurate forecasts.
Nonetheless, the important issue is not how accurate CLSA’s figure is, but the main reason behind its gloomy forecast: a collapse in the nation’s exports.
People have to face the cruel reality that our economy depends too heavily on exports, which account for about 60 percent to 65 percent of GDP, and it may be a tipping point for the nation to seriously reconsider how to adjust its fundamental economic and financial structures to address Taiwan’s long-term economic development. Second, those who have put their faith in China’s economy should understand that its exports and manufacturing output have continued to fall in recent months, and the global economic slowdown has yet to bottom out.
Obviously, years of investment in China has made Taiwan overly dependent on it, and December’s plunge of 54 percent in shipments to China including Hong Kong, which accounted for about 40 percent of the nation’s exports, should sound alarm bells.
The global slowdown could worsen and lead to a retaliatory trade war among nations, given the development of protectionist tendencies among several governments as a way to combat the economic downturn and rising unemployment at home.
Most of the time, doomsayers are not welcome, even though some of their forecasts have proven true long after they made the remarks. At the end of 2000, when then newly appointed minister of economic affairs Lin Hsin-yi (林信義) said the public needed to be prepared for hardship in 2001, there were few people really paying attention to what had given rise to his warning, and economists maintained their forecasts for 2001’s GDP growth ranging from 4 percent to 6 percent. And what happened? Taiwan saw a GDP contraction of 2.17 percent in 2001, a record decline at the time.
Chinese actor Alan Yu (于朦朧) died after allegedly falling from a building in Beijing on Sept. 11. The actor’s mysterious death was tightly censored on Chinese social media, with discussions and doubts about the incident quickly erased. Even Hong Kong artist Daniel Chan’s (陳曉東) post questioning the truth about the case was automatically deleted, sparking concern among overseas Chinese-speaking communities about the dark culture and severe censorship in China’s entertainment industry. Yu had been under house arrest for days, and forced to drink with the rich and powerful before he died, reports said. He lost his life in this vicious
A recent trio of opinion articles in this newspaper reflects the growing anxiety surrounding Washington’s reported request for Taiwan to shift up to 50 percent of its semiconductor production abroad — a process likely to take 10 years, even under the most serious and coordinated effort. Simon H. Tang (湯先鈍) issued a sharp warning (“US trade threatens silicon shield,” Oct. 4, page 8), calling the move a threat to Taiwan’s “silicon shield,” which he argues deters aggression by making Taiwan indispensable. On the same day, Hsiao Hsi-huei (蕭錫惠) (“Responding to US semiconductor policy shift,” Oct. 4, page 8) focused on
In South Korea, the medical cosmetic industry is fiercely competitive and prices are low, attracting beauty enthusiasts from Taiwan. However, basic medical risks are often overlooked. While sharing a meal with friends recently, I heard one mention that his daughter would be going to South Korea for a cosmetic skincare procedure. I felt a twinge of unease at the time, but seeing as it was just a casual conversation among friends, I simply reminded him to prioritize safety. I never thought that, not long after, I would actually encounter a patient in my clinic with a similar situation. She had
George Santayana wrote: “Those who cannot remember the past are condemned to repeat it.” This article will help readers avoid repeating mistakes by examining four examples from the civil war between the Chinese Communist Party (CCP) forces and the Republic of China (ROC) forces that involved two city sieges and two island invasions. The city sieges compared are Changchun (May to October 1948) and Beiping (November 1948 to January 1949, renamed Beijing after its capture), and attempts to invade Kinmen (October 1949) and Hainan (April 1950). Comparing and contrasting these examples, we can learn how Taiwan may prevent a war with
RSS