Government figures painting a gloomy economic picture

Record unemployment and falling export and manufacturing output figures released yesterday have cast a pall over Taiwan's already troubled economy.

According to the Directorate General of Budget, Accounting and Statistics (主計處), unemployment rose from 3.73 percent in February to a 15-year high of 3.89 percent without adjusting for seasonal factors.

The last time the unemployment rate reached such heights was in August 1985, when it hit 4.09 percent.

The directorate placed blame for the latest increase on the global economic slowdown and rising business closures and cutbacks, which claimed 19,000 jobs in March. In March there were 380,000 people out of work, an increase of 16,000 from the previous month and 106,000 over the same period last year.

According to number cruncher Chen Jin-cherng (陳金城), "unemployment may top 4 percent around June when graduates and men who have finished their military service enter the job market."

The average unemployment rate for the year may hit 3.9 percent, he added.

Irmak Surenkok, an economist at Primasia Securities Corp, agreed, saying "the seasonally unadjusted unemployment rate, I [predict], will top 4 percent in August and hold around 3.9 percent for the remainder of the year."

Neal Stovicek, investment strategist at National Securities Corp (建弘證券), said that unemployment could peak in the second half of the year and would maintain its high level.

"It's possible that, based on the second-half potential technology demand recovery and the traditionally strong third and fourth quarter electronics demand, unemployment will peak out," Stovicek said. "But it would stabilize at this higher level."

There appeared little hope that the swelling ranks of the jobless would begin to dwindle any time soon.

Indeed, according to Surenkok, the high unemployment will linger. As traditional industry firms cut labor costs by either laying off employees or relocating to cheaper countries such as China, their employees will likely remain out of work due to the immobility of workers in this sector, she said.

In other bad news for the economy, the Ministry of Economic Affairs reported that March exports had fallen by 1.12 percent year-on-year to US$12.5 billion while manufacturing output contracted by 5.6 percent.

The ministry attributed the contraction to slackening demand in the European and Japanese markets, where demand for Taiwan exports dropped year-on-year by 9.38 percent and 9.57 percent, respectively.

However, orders from Hong Kong and the US jumped slightly year-on-year by 2.45 percent and 2.88 percent respectively.

"Although demand growth from the US and Hong Kong was positive I don't think this means that in the next few months it's going to continue," said Surenkok. In fact "exports this year are going be contracting sharply from last year. I forecast a 5 percent fall in [actual] exports for 2001 after posting over 20 percent growth last year," she added.

Industrial output in March fell 4.17 percent in the first three months while production of information technology products fell by 5.51 percent in the same period, according to the economics ministry.