Mon, Aug 15, 2016 page6

• EDITORIAL: Economic policy needs direction

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  The nation’s exports returned to positive territory last month, coming on the heels of several other positive economic data. Last month’s 1.2 percent growth in exports marked the first annual increase in the past 18 months, rising from an annual contraction of 2.1 percent in June and 9.6 percent in May.

  With last month’s imports posting a better-than-expected annual decline of 0.2 percent, the positive trade data indicate that the nation’s economy is likely to come out of recession and resume growth. Most importantly, growth is likely to accelerate this quarter, increasing the odds that GDP growth could rise above 1 percent this year.

  A survey conducted last month and released last week by the German Ifo Institute showed that Taiwan’s economic outlook would improve in the next six months, supported by positive exports, imports and consumer prices.

  However, there is no reason to expect a substantial economic expansion in the coming months, as economic headwinds persist. Taiwan’s export-reliant economy is facing structural challenges inside and outside the nation, including a shift from manufacturing to the service sector in Taiwan and signs of the nation’s economic marginalization, as well as increasing competition from China amid a national drive to upgrade its high-tech industry.

  Moreover, there is little indication of a real turnaround in global economic outlook to sustain solid demand for goods produced by Taiwanese manufacturers, which will need support from public or private investment to maintain employment, household income and corporate profits at their current levels.

  Unfortunately, the prospects for domestic investment look dim, given that the administration’s governing ability is getting weaker.

  From the previous Chinese Nationalist Party (KMT) government to the current Democratic Progressive Party (DPP) administration, policymakers have exhibited an inability to communicate with the public. They also seem to not know how to execute policies, and the policies, when executed, sometimes create obstacles to businesses.

  From urban renewal projects, free economic pilot zone plans and a strike by China Airlines’ flight attendants in late June to the deferral of legislation regulating the workweek, it has become increasingly clear that the government — regardless of who is in power — lacks a clear policy and is incapable of solving problems when businesses run into trouble.

  In Taiwanese society, public protest has become a prominent mode of political participation, which allows the government to hear different voices regarding certain issues and policies. However, the danger of ineffective governance — including a failure to take appropriate measures after weighing the pros and cons of policies, and facilitate rational discussions among all parties on thorny issues — has not only harmed social harmony, but also led to setbacks in investment over the past few years.

  Taiwan is facing the negative aspects of rapid social change and the inclusion of new groups into politics, which partly explains why the nation has lost its economic advantage over its neighbors.

  Taiwanese have become accustomed to transitions of power over the past few decades. This is the beauty of democracy, where citizens are free to change and choose their leaders periodically.

  Thus far, the DPP government has begun several initiatives and tried to impress the public in the first 100 days of President Tsai Ing-wen’s (蔡英文) term in office, but what the public needs is a government that can resolve problems and place the nation on the right track.
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