The Occupy Wall Street movement had sister protests in many cities around the world on Saturday, including one in Taipei. The protest at Taipei 101 was not as large as those in many other cities, perhaps because the wealth disparity is not quite as conspicuous here and because Taiwan’s economic situation has not gone downhill at the rate seen elsewhere, although that is not to say it will not. Still, that there was a protest here at all suggests there is more discontent about the economy and wealth disparity in Taiwan than first meets the eye.
Opinion polls currently put President Ma Ying-jeou (馬英九) ahead in the presidential race, but his campaign team should not break out the champagne just yet. The biggest obstacle to Ma’s re-election is not Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) or People First Party Chairman James Soong (宋楚瑜), it’s the economy. If it takes a turn for the worse soon, the election campaign will be an uphill struggle for Ma, and he may even lose. If the economy trots along at a slow rate of growth, the chances of winning re-election are still quite high for the governing party. In democratic countries, the economy is usually the priority during elections and the government’s biggest concern is that the economy will hit a sticky patch in the run-up to the poll. If it does, the electorate could blame the government and decide to “let the other guy have a go.”
Right now, the world economy is barely limping along and is starting to show signs of a slide. The US and Europe are concerned about the possibility of entering a double-dip recession. Regardless of whether they do, forecast agencies are continuously adjusting economic growth rate predictions downward, revealing weak consumer spending and high unemployment. The IMF and the US Federal Reserve have separately issued warnings of a possible contraction in the US and eurozone economies.
Even in China, which by all accounts weathered the 2008 financial storm well and is still predicting an economic growth rate for this year and the next of about 9 percent, small and medium-sized businesses are already beginning to close their doors and inflation is starting to bite. China is unlikely to be the financial buffer this time round that it was a couple of years ago.
The Directorate-General of Budget, Accounting and Statistics initially predicted an economic growth rate for Taiwan this year of more than 5 percent, but this was adjusted downward in August to 4.8 percent and future predictions could be adjusted further downward. The capacity utilization rate is falling and firms are no longer hiring. Taiwanese companies that rely predominantly on exports to the US and Europe are either encouraging their staff to take leave, asking them to take unpaid leave or even making them redundant. Business is poor, the global markets are touch-and-go and we are moving into a bear market. The TAIEX recently fell to just over 6,800 points and, although it closed at 7,359.48 yesterday, investors may well vote pan-green in the elections if it continues to fall.
The ruling Chinese Nationalist Party (KMT) needs to pull the economy back up, shore up the stock markets and try to stem the decline as much as possible. The symptoms of our economic woes are going to emerge, but the KMT needs to keep these problems at bay until after the election. The DPP will be monitoring how the economic climate is affecting voter intentions.
As former US president Bill Clinton so prosaically put it: “It’s the economy, stupid.” The coming election is a race not just between the main parties, but also between the government and the economy. If the government manages to keep its finger in the dike until after the election, the DPP will have a tough run of it.
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