The US remains the world's most competitive economy but risks plunging into an economic recession just like Japan in the 1990s because of structural weaknesses, a new study warned yesterday.
The US once again ranked first in an annual competitiveness survey by the Swiss-based Institute for Management Development (IMD), but risks being toppled from its plinth with both Singapore and Hong Kong close behind.
“Singapore is closing the gap with the US and 2008 might be the turning point where the US falls from its leadership of top competitors,” the IMD said in a statement.
IMD economist Stephane Garelli said the US situation bears hallmarks of Japan’s position twenty years ago, just before it slid into a decade of recession, and when the Lausanne-based institute carried out its first competitiveness survey.
past crisis
“The past crisis in Japan bears some resemblance with the present turmoil in the US,” he said.
In 1989, “Japan’s competitiveness seemed unassailable, with a strong domination in economic dynamism, industrial efficiency and innovation,” he said.
“Then all hell broke loose: The stock market went into reverse in 1989, land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997 and a major credit crunch occurred in 1998,” Garelli said.
“Does this ring a bell?” Garelli asked rhetorically.
The US economy has been badly hit by the subprime mortgage crisis and the IMF has forecast a “mild recession” with annual growth at a paltry 0.5 percent for this year.
not watertight
However, Garelli said the comparison with Japan was not watertight, noting that “because of its openness, resilience and entrepreneurship, [the US] always seems to find the means to reinvent itself in ways that Japan [and much of Europe] often lacks.”
Washington has also learned from Tokyo’s mistakes in some respects, particularly in supplying liquidity to embattled financial institutions, he said.
“The [US} Federal Reserve and the Treasury were thus quick to realize the magnitude of the risk and will continue to take drastic action,” he said.
Significant challenges remain, however.
“The structural deficits in the US [balance of trade, budget and, as a consequence, national debt] have ultimately to be addressed otherwise the dollar will remain weak,” Garelli warned.
“In the 20 years that we have ranked and analyzed competitiveness, we have learned one thing — no nation, however competitive, is immune to a breakdown, especially when it stems from the financial sector,” he said.
European weakness
Ten European countries featured among the 55 surveyed, including Switzerland in 4th place, Luxembourg 5th, Sweden 9th, the Netherlands 10th, Norway 11th and Ireland 12th.
Britain, France and Italy, the European members of G8, languished in 21st, 25th and 46th place respectively.
Rainfall is expected to become more widespread and persistent across central and southern Taiwan over the next few days, with the effects of the weather patterns becoming most prominent between last night and tomorrow, the Central Weather Administration (CWA) said yesterday. Independent meteorologist Daniel Wu (吳德榮) said that based on the latest forecast models of the combination of a low-pressure system and southwesterly winds, rainfall and flooding are expected to continue in central and southern Taiwan from today to Sunday. The CWA also warned of flash floods, thunder and lightning, and strong gusts in these areas, as well as landslides and fallen
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
SOUTH CHINA SEA? The Philippine president spoke of adding more classrooms and power plants, while skipping tensions with China over disputed areas Philippine President Ferdinand Marcos Jr yesterday blasted “useless and crumbling” flood control projects in a state of the nation address that focused on domestic issues after a months-long feud with his vice president. Addressing a joint session of congress after days of rain that left at least 31 dead, Marcos repeated his recent warning that the nation faced a climate change-driven “new normal,” while pledging to investigate publicly funded projects that had failed. “Let’s not pretend, the people know that these projects can breed corruption. Kickbacks ... for the boys,” he said, citing houses that were “swept away” by the floods. “Someone has
‘CRUDE’: The potential countermeasure is in response to South Africa renaming Taiwan’s representative offices and the insistence that it move out of Pretoria Taiwan is considering banning exports of semiconductors to South Africa after the latter unilaterally downgraded and changed the names of Taiwan’s two representative offices, the Ministry of Foreign Affairs (MOFA) said yesterday. On Monday last week, the South African Department of International Relations and Cooperation unilaterally released a statement saying that, as of April 1, the Taipei Liaison Offices in Pretoria and Cape Town had been renamed the “Taipei Commercial Office in Johannesburg” and the “Taipei Commercial Office in Cape Town.” Citing UN General Assembly Resolution 2758, it said that South Africa “recognizes the People’s Republic of China (PRC) as the sole
RSS