Council for Economic Planning and Development (CEPD) Chairwoman Christina Liu (劉憶如) said yesterday that escalating tensions between the two Koreas could have a negative effect on Taiwan and that the government would be hard pressed to fulfill its “6-3-3” pledge by 2012.
“In my opinion, [the tensions between] South Korea and North Korea will have the most impact on Taiwan’s economy in the short term given our geographical proximity and robust trade interaction,” Liu said in her first appearance as council chief at a question-and-and-answer session in the legislature.
Liu was responding to questions by Chinese Nationalist Party (KMT) Legislator Ting Shou-chung (丁守中) on which international risks posed the greatest threat to Taiwan: tensions in the Korean Peninsula, the eurozone debt crisis, an Asian asset bubble or Western countries’ fragile economic recovery.
Liu said that if tensions between the two Koreas continued to escalate, it would have a negative impact on Taiwan’s economic development as international investors might withdraw from Asian markets, sending local stock and currency markets tumbling.
“There is no denying that when Asia encounters a problem — it doesn’t matter which country it is — international funds normally pull out [of the regional market],” Liu said.
She said the local stock market was very sensitive to global disturbances and Taiwan was an “unwitting victim” of the Korean crisis, referring to local stocks nose-diving on Monday.
However, Liu said that as Taiwan and South Korea are in neck-and-neck competition in the DRAM, LED and flat-panel industries, a silver lining in the Korean crisis was that a share of the foreign direct investment that was intended for South Korea could be diverted to Taiwan.
Liu also told lawmakers that except for economic growth likely expanding by 6 percent this year, it would be difficult to lower unemployment to below 3 percent and to raise annual per capita income to US$30,000 by 2012.
She was referring to President Ma Ying-jeou’s (馬英九) “6-3-3” campaign pledge to achieve annual GDP growth of 6 percent, annual per capita income of US$30,000 and to lower unemployment rate to below 3 percent during his term in office.
“Based on the current situation, I think it would be hard to achieve the ‘6-3-3’ goal by 2012,” Liu said, blaming the global financial crunch in 2008 that took its toll on the nation’s economy.
“No one had expected an outbreak of the financial crisis when the economic policy was made,” she said.
Calling on the government to remain prudent in dealing with structural unemployment, Liu said the council would strive to lower the jobless rate, which hit 5.39 percent last month, to below 5 percent by the end of this year.
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