Although the government expects the economy to post a mild rebound in the fourth quarter, deteriorating global economic conditions may delay Taiwan’s economic recovery until next year, an economist said yesterday.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), said the probability of a recovery was higher next year as the global market would remain volatile this year with US and European financial institutions expected to continue deleveraging.
“Judging from their economic data, the credit unease will persist in the US and Europe,” Liang told a seminar in Taipei. “The prospect of their economies hitting bottom is more likely to take place next year than this year.”
The US and Europe, the main end markets of Taiwanese information and communications products, are battering the worst economic blows since the 1930s attributable to loose credit expansion, Liang said.
The economist, who also serves as an adviser for the Council for Economic Planning and Development, quoted the Case Shiller Home Price Index, a major US property valuation gauge, as saying the US housing market would not stabilize until the end of next year.
Liang’s observation differed from the government’s forecast that the domestic economy would expand by 4.5 percent in the final quarter after contracting for five straight quarters starting last July.
“I could not rule out all probability of recovery for this year, but its chance of being realized is very low,” Liang said. “The chances look better in 2010 or maybe even in 2011.”
Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, who also attended the seminar, agreed that the economy was contracting while unemployment was surging because of a sharp decline in exports and domestic consumption.
But Hung said that looking at historical trends, the nation stood a fair chance of coming out of recession in the fourth quarter, as past recessions averaged four to six months.
The economic official added that the government had adopted a series of stimulus measures — including distributing shopping vouchers, promoting infrastructure projects and vocational training programs — whose effect would start to be felt later this year.
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