The National Development Council is drafting stimulus measures to boost private consumption next year when external demand is expected to soften amid the US-China trade dispute.
Government agencies are taking an inventory of policy tools on hand and the council should come up with a stimulus package by the Lunar New Year, which falls on Feb. 5, to bolster the nation’s economy, council Minister Chen Mei-ling (陳美伶) said at a year-end news conference.
The council expects GDP to expand by 2.4 to 2.6 percent next year, slowing from an estimated 2.66 percent this year, it said in a report.
The row between the US and China has evolved from tariff exchanges to a battle for global technology dominance and Taiwan is likely to take a hit given its deep role in the global technology supply chain, Chen said.
The adverse impact is not expected to be as hard as that wrought by Europe’s debt woes or the global financial storm in 2008, the minister said.
A slowdown of 0.5 percentage points in China’s GDP would weaken Taiwan’s economy by 0.2 percentage points, council Deputy Minister Cheng Cheng-mount (鄭貞茂) said, as more than 40 percent of Taiwanese exports are destined for the world’s second-largest economy.
International research institutes expect Chinese GDP growth to slow to 6.2 percent next year, from about 6.6 percent this year, Cheng said.
Potential stimulus measures include a domestic travel subsidy program for visits to small towns in the nation and purchases of energy-efficient home appliances, Chen said.
“Domestic demand needs support next year if the nation is to meet its growth target,” Chen said.
Private consumption fared weaker than expected last quarter, as the trade dispute eroded confidence and is likely to continue to weigh on sentiment, the Directorate-General of Budget, Accounting and Statistics said last month.
To avoid that, the government plans to spend more than NT$100 billion (US$3.25 billion) on the Forward-looking Infrastructure Development Program next year and in 2020, Chen said.
Government agencies are to hold discussions on the stimulus package right after the New Year and should reach a conclusion before the Lunar New Year holiday, she said.
The minister also called for labor rule revisions, saying that flexible working hours are needed for the development of a new economy in the digital era.
High-paid managers, technology engineers, and research and development professionals often work around the clock and should be spared from rigid work-hour requirements, the minister said.
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