As Taiwan’s economy relies heavily on exports, it should be vigilant against a possible domino effect caused by the escalating Greek debt crisis, as crumbling talks with its European creditors over the weekend pushed Greece to the brink of bankruptcy, which could have substantial repercussions.
Greece was expected to default on a 1.6 billion euro loan repayment to the IMF yesterday, with international creditors refusing yet another loan extension due to a lack of substantial economic reform measures.
Greece on Monday announced the closure of banks for one week and imposed capital controls after Greek bank deposits fell to an 11-year low. Greek Prime Minister Alexis Tsipras’ announcement that its European lenders’ fresh bailout measures would be put before voters in a referendum brings the nation one step closer to exiting the euro.
Taiwanese markets suffered from the intensifying Greek debt crisis as the latest developments left investors fretting that a Greek exit from the euro would destabilize economic recovery in the eurozone and even affect the global economy.
The TAIEX took a nosedive on Monday to 9,236.1, below the monthly average of 9,300, as investors scrambled to sell equities. Foreign investors sold a net total of NT$7.1 billion (US$228.52 million) of local shares on Monday. Among Asian markets, which were the first to trade in the wake of the weekend’s developments in Greece, the Nikkei 225 stock average in Tokyo plunged 2.9 percent, while the Shanghai Composite Index tumbled 3.3 percent and Hong Kong’s Hang Seng sank 2.6 percent.
As the Greek drama played out, the Dow Jones Industrial Average and S&P dipped 1.95 percent and 2.09 percent overnight respectively, while the FTSE 100 in London fell 1.97 percent and the DAX in Frankfurt, Germany, plunged 3.56 percent.
For Taiwan, the Greek debt crisis might seem somewhat irrelevant given that as of April, the nation’s 37 lenders’ combined exposure to Greece totaled NT$35 million, and local insurance companies and fund brokerages do not hold any position in Greek securities, according to the Financial Supervisory Commission.
Despite the TAIEX yesterday bouncing back 0.94 percent, Taiwan should be wary, as the repercussions of the Greek debt crisis are likely to result in a weakened euro and have an impact on single-currency economies, translating into slower consumer spending and less private investment. Such a scenario would result in weakened demand for electronics. As Europe is one of the major overseas markets for Taiwan’s machine tool suppliers and electronics brands, such as Acer Inc, Asustek Computer Inc and HTC Corp, a faltering European economy and a decline in private consumption would impact negatively on local exports.
Europe is the fourth-largest export destination for Taiwanese manufacturers, accounting for 8.8 percent of exports in the first five months of this year, according to the latest statistics released by the Ministry of Finance. Exports to Europe contracted at an annual rate of 12 percent to US$10.49 billion in the first quarter, while total exports fell 5.7 percent year-on-year, marking the sixth consecutive month of annual decline, ministry data showed. Electronic products were the biggest export item, accounting for nearly 33 percent during the same period.
The statistics did not include goods exported to China and then re-exported to Europe. Including re-exported goods, Europe was the second-largest market, after China, accounting for 18 percent of Taiwan’s exports, surpassing ASEAN and the US, which accounted for 18 percent and 12 percent respectively.
Due to the effects of globalization, adverse economic conditions can affect the global economy. As Taiwan is a small economy, vulnerable to market volatility, it must prepare for major economic changes.
Having lived through former British prime minister Boris Johnson’s tumultuous and scandal-ridden administration, the last place I had expected to come face-to-face with “Mr Brexit” was in a hotel ballroom in Taipei. Should I have been so surprised? Over the past few years, Taiwan has unfortunately become the destination of choice for washed-up Western politicians to turn up long after their political careers have ended, making grandiose speeches in exchange for extraordinarily large paychecks far exceeding the annual salary of all but the wealthiest of Taiwan’s business tycoons. Taiwan’s pursuit of bygone politicians with little to no influence in their home
In 2025, it is easy to believe that Taiwan has always played a central role in various assessments of global national interests. But that is a mistaken belief. Taiwan’s position in the world and the international support it presently enjoys are relatively new and remain highly vulnerable to challenges from China. In the early 2000s, the George W. Bush Administration had plans to elevate bilateral relations and to boost Taiwan’s defense. It designated Taiwan as a non-NATO ally, and in 2001 made available to Taiwan a significant package of arms to enhance the island’s defenses including the submarines it long sought.
US lobbyist Christian Whiton has published an update to his article, “How Taiwan Lost Trump,” discussed on the editorial page on Sunday. His new article, titled “What Taiwan Should Do” refers to the three articles published in the Taipei Times, saying that none had offered a solution to the problems he identified. That is fair. The articles pushed back on points Whiton made that were felt partisan, misdirected or uninformed; in this response, he offers solutions of his own. While many are on point and he would find no disagreement here, the nuances of the political and historical complexities in
Taiwan faces an image challenge even among its allies, as it must constantly counter falsehoods and misrepresentations spread by its more powerful neighbor, the People’s Republic of China (PRC). While Taiwan refrains from disparaging its troublesome neighbor to other countries, the PRC is working not only to forge a narrative about itself, its intentions and value to the international community, but is also spreading lies about Taiwan. Governments, parliamentary groups and civil societies worldwide are caught in this narrative tug-of-war, each responding in their own way. National governments have the power to push back against what they know to be
RSS