On Aug. 18, the Directorate-General of Budget, Accounting and Statistics (DGBAS) released its latest economic growth forecast for this year, which it had adjusted downward to 4.81 percent, from the 5.01 percent it estimated last month. Although the current figure is only 0.2 percentage points lower than the previous forecast, it means that hopes for 5 percent growth this year have been dashed.
If you factor in the suspension of operations at Formosa Plastics Group plants in Yunlin County while safety inspections are carried out, that figure could drop by another 0.2 percentage points. US-based Morgan Stanley has also reduced its growth estimate for the Taiwanese economy this year from 5 percent to 4.2 percent, with a prediction of only 3.6 percent expansion next year. In other words, not only is the economy expected to be even worse than it is now, it looks like the goal of achieving growth of even 3 percent might be in jeopardy.
The gloomy economic forecast has hardly come as a surprise to many. It is only the government that is refusing to face the facts. Just the other day, the Council for Economic Planning and Development was still insisting that there should be no problem achieving 5 percent economic growth this year. Minister of Economic Affairs Shih Yen-shiang (施顏祥) is still touting 5 percent growth as his target; and government officials have been disputing the pessimistic figures. However, the one to really take the biscuit was Premier Wu Den-yih (吳敦義), who claimed that “due to the correct policies of the government,” GDP grew 10.88 percent last year, the unemployment rate fell and the economy is just at the start of a recovery trend. Indeed, he opined, the public should have faith in President Ma Ying-jeou’s (馬英九) prediction of a “golden decade” for the Taiwanese economy.
When you have a senior figure such as Wu blindly refusing to face the situation and straying so far from reality, the public — especially those who have fallen foul of the recent stock market crisis — must surely be at a loss as to what to think.
Ma is seeking a second term in office. What assurances does he bring the Taiwanese? Four years ago, he made a campaign promise he termed the “6-3-3” goal — 6 percent economic growth each year, a per capita income of US$30,000 and an unemployment rate of less than 3 percent by next year. Not only did he renege on the first and last of these promises some time ago, but now it turns out it will be difficult even to meet Shih’s recent call for growth of 5 percent and an unemployment rate of 4 percent. The most ludicrous of all was Wu’s attempt to take credit for 10 percent growth last year. Does he think the public has forgotten the previous year’s paltry 1.9 percent, one of the worst recorded, which presumably should also be attributed to the government’s policies, or that it has escaped us that the apparently high figure last year has to be seen in the context of a low comparison base?
The Ma administration has steered the nation off course, as is evident in a comparison with the other Asian Tigers — Singapore, Hong Kong and South Korea — among which Taiwan has the highest unemployment, and its economic growth rate dithers way behind. However, the public is not so much interested in the economic growth rate as the distribution of income. In the same DGBAS report, the agency said that there was a 6.19-fold difference between the top fifth and bottom fifth of the population in terms of income — the third-largest difference recorded. Gone are the days when Taiwan had an international reputation for not putting economic growth before the distribution of wealth. Even more worrying is the fact that the government has already passed next year’s central government budget, and for the first time, accumulated government debt passed the NT$5 trillion (US$172.24 billion) mark. The government keeps piling up its debt, saying that it is still below the designated ceiling in terms of percentage of GNP. For the past three years, the government’s annual budget has pushed the budget further into the red to the tune of NT$380 billion a year, on average, considerably more than the average annual increases of NT$166 billion during the eight years the Democratic Progressive Party was in power. The Ma administration seems to be good at one thing at least: building up debt that our children are going to have to deal with.