Taiwan’s economy is not just in a slump, it is in great trouble. Last week, the IMF adjusted the nation’s economic growth figures for this year downward by almost 1 percentage point, leaving it only just above 3 percent. Then the Directorate-General of Budget, Accounting and Statistics (DGBAS) announced the economic growth figures for the first quarter of this year, putting it at 1.54 percent, 1.72 percentage points below its original forecast of 3.26 percent. That economic growth has been adjusted downward by more than 50 percent is evidence that President Ma Ying-jeou’s (馬英九) administration has misjudged the situation and that the economic problems are more than just a matter of short-term economic trends — there are some major long-term issues.
The list of the Ma administration’s miscalculations is long. Half a year ago, Ma repeatedly said that in September last year, positive signs for Taiwan’s economy had begun appearing, and that he could now “see the light at the end of the tunnel.”
Following that, DGBAS Minister Shih Su-mei (石素梅) said that things were looking up for Taiwan. Council for Economic Planning and Development Minister Kuan Chung-ming (管中閔) said with some emphasis that economic growth of 3.8 percent for the year would not be a problem, and that it might even exceed 4 percent, while unemployment would fall below 4 percent.
Now the economic forecasts by some of the government’s highest officials have blown a hole in all these predictions, along with the government’s credibility.
Using inflated government figures that cannot stand up to scrutiny to deceive the public is par for the course for the Ma administration, and it is resorting to doing so with increasing frequency.
There are data to show that economic growth has continued to drop in every quarter for the past two years, and in particular during the year from the fourth quarter of 2011 to the third quarter of last year, when economic growth hovered between just over 0 percent and 1 percent, even falling below zero in the second quarter. When things started looking slightly better during the fourth quarter last year, the government thought that, given to the low base of comparison, the figures would look better for this year, and government officials began to exaggerate the situation and play up their economic forecasts.
The government has learned this trick from its past successful deceptions. Ma took office in 2008, and that year, economic growth halted at 0.73 percent. The following year was even worse, as the economy contracted by 1.81 percent, the nation’s worst performance on record. In 2010, Ma’s third year in office, the economy rebounded and grew by 10.76 percent after two years of deplorable figures. The government saw this as proof of its ability, and since then it has been bragging about how it “created” economic growth of more than 10 percent. It is now repeating the same trick, allowing itself to be made a fool of by the constantly changing economic climate.
Apart from the current economic slump, the overall economy is facing a fundamental and long-term problem that is even more worthy of our attention.
With the exception of the strong economic rebound during Ma’s third year in office, the government has only barely managed to maintain more than 4 percent growth for one year in the past five. Economic growth in the remaining three years was anemic, and during the first quarter of this year, it has been possible to see the causes of most problems: sluggish exports and weak domestic consumption.