Last week’s GDP data are a wake-up call to the government in terms of the economic impact of the slowing global recovery and the need to improve its ability to make growth forecasts. However, the government should understand that there can be no better way to revitalize the nation’s economy than to ensure people have a high standard of living and decent jobs.
The latest figures from the Directorate-General of Budget, Accounting and Statistics (DGBAS) show that Taiwan’s GDP growth expanded by 1.54 percent year-on-year in the January-to-March quarter, as private investment picked up sufficiently to offset broad-based weaknesses in private consumption, international trade and government investment. The figure surprised many people, including the government itself, because the agency had forecast in February that the economy would grow by 3.26 percent in the first quarter.
For now, the DGBAS is sticking to its full-year growth forecast at 3.59 percent, but this relatively upbeat forecast — compared with estimates made by some foreign institutions — signals that the government either lacks a sense of urgency or is confident in its ability to revive the economy.
Already, the IMF’s Regional Economic Outlook: Asia and Pacific, released last week, shows Taiwan’s economy is likely to expand by 3 percent this year and 2.8 percent next year, down from the forecasts of 3.9 percent and 3.6 percent respectively which it made in October last year. In addition, Credit Suisse AG now expects Taiwan’s GDP will increase by 2.7 percent this year, as opposed to its prior estimate of 3.4 percent, while JPMorgan Chase expects growth of 3.3 percent for Taiwan this year, down from its previous estimate of 4.2 percent growth.
There are signs that private investment — which increased by 10.64 percent year-on-year in the first quarter and outpaced the government’s forecast of 5.63 percent — will continue to grow this year, thanks to the recovery in technology companies’ capital expenditure, as well as government initiatives to attract investment from foreign investors.
However, the government needs to consider whether poor private consumption suggests that consumers remain wary about the economic prospects and as a result are spending less and saving more.
That consumers are becoming more frugal is a result of stagnant wages, because real wages have still not returned to their level of 18 years ago. Although the latest job data show the domestic unemployment situation remains stable, the problem of stagnant wages indicates that the jobs being created are mostly poorly paid, while both the government and business sectors are becoming increasingly dependent on part-time and temporary workers, rather than full-time employees, to fill vacancies.
The government’s recent push to set up “free economic pilot zones” shows policymakers’ desire to open up and stimulate economic growth, but this push could result in a mixed bag for businesses and workers. One issue is that if the government were to offer businesses substantial investment benefits and tax incentives without making an effort to create good jobs with decent wages, the pilot zone plan would benefit only businesses and foreign workers. This would mean stagnant salary growth and weak consumer spending would continue.
For Taiwan, a solid economic recovery depends on solid growth in domestic productivity and exports, followed by meaningful improvements in the labor market. The government must make more concrete efforts to revitalize the economy.
One of the most urgent tasks the government faces is to have a productive workforce. While businesses will create most of the jobs, the government must help develop the necessary conditions to ensure those jobs are of sufficient quality.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations