Taipei Times: As the first year of President Chen's administration comes to an end, economic indicators, such as rising unemployment and forecasts of slowing GDP growth, paint a negative picture. Indeed, you have said that people should be prepared for more "bitter days" ahead. How do you expect the economy to perform over the next year?
Lin Hsin-yi: Since November, imports and exports and industrial output have eased and this year all the indicators are showing signs of a decline. Industrial output for the first quarter of this year fell by 4.17 percent, while between January and the end of April the total value of exports and imports contracted by 5.7 percent and 11 percent, respectively. April also marked the fourth month the nation's economic indicator had posted a blue light, which means the economy has declined. In April the unemployment rate hit a historic high of 3.89 percent. In the short term these indicators don't provide a positive outlook.
The third and fourth quarters are the busiest times for manufacturing, exports and imports and consumption. The government will begin its expansion of public spending projects at that time and the incremental effects of monetary policy will be felt.
Therefore the economic climate will bottom out in the third or fourth quarter. The cycle of this slump should ease gradually, but if the international economic situation doesn't make a significant turn for the better, the pace of Taiwan's recovery won't be that strong.
TT: How do you view the global economic situation and its impact on Taiwan?
Lin: According to estimates by the International Monetary Fund, growth in the global economy and trade will average about 3.2 percent and 6.7 percent respectively, showing that the pace of growth has slowed considerably. However, both the US and Japan have already loosened monetary policy which should stall the economic climate from sinking any lower. General estimates predict that the US economy will likely hit bottom in the third or fourth quarter. Because Taiwan is one link in the global economy we must examine the various international factors in attempting to determine when our economy may recover.
Age: 55
Place of Birth: Tainan
Experience: Bachelor's degree in mechanical engineering, National Cheng-Kung University; Former president of China Motor Corp.
Successes: Removed some obstacles to private investment by reducing red tape.
Failures: The case for scrapping the Fourth Nuclear Power Plant could have been better explained to the public.
Grade: B+
Recently Dell, Compaq and other major American high-tech manufacturers have made large reductions in their workforces manning their manufacturing lines and ordering from foreign contract suppliers instead. These companies have also been reducing their inventories, which has helped the high-tech sector ease the excess in supply. If domestic firms can snap up the orders from major international firms they will be able to strengthen relationships with their competitive partners, or merge with their competitors and snap up the licenses to manufacture key technology and turn Taiwan into a major global contract maker of high-tech products.
Because recently the international climate has changed, the impact on the domestic economy has been extensive. This has been compounded by the change in government. As the process of promoting a number of major policies met with quite a lot of discussion and criticism it has been hard to avoid causing some uncertainty among the people, which has deepened fears of a slowing economy. But in resisting the economic downturn there is no special medicine.
Basically we must start with improving the structure of companies. So by taking the viewpoint that there will be bitter days, I was urging everybody to "think of danger in times of peace." Government, business, workers, everybody should join together to boost our economy.
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