Taiwan's economy has been in the doldrums due to the influence of the international economic environment and to its own domestic industrial transformation. The economy was just beginning to show signs of improvement after the Economic Development Advisory Conference drew up recovery plans. Then, it suffered two blows in quick succession -- repercussions from the Sept. 11 terrorist attacks against the US and the massive damage done by Typhoon Nari in the northern and central parts of the country. After a string of natural and man-made catastrophes, the world is suddenly very different at the beginning of a millennium.
What impact have these disasters had on Taiwan? The Directorate General of Budget, Accounting and Statistics announced yesterday that the unemployment rate rose to 5.17 percent in August. The figure for September is expected to be much worse. Chen Po-chih (陳博志), chairman of the Council for Economic Planning and Development, has said that the attacks in the US will cut Taiwan's economic growth rate by another 0.2 percentage points next year.
The private Chung-hua Institution for Economic Research is even less optimistic, saying it expects the economy to contract by 2 percent. JP Morgan has also revised its forecast for Taiwan, saying it anticipates a 2.6 percent contraction next year.
Disasters increase the uncertainty of economic activities and therefore have a negative impact on investment and consumption. The terrorist attacks have hurt Wall Street and other markets around the world. They have also severely affected the air transport and tourism industries, and caused airline insurance premium rates to skyrocket. Many airline companies are facing a possible halt in operations or even collapse.
The disasters have also had a psychological impact on society which are detrimental to investment, consumption and the overall economy.
Taiwan's government has adopted contingency measures to tackle the impact of the disasters. For example, it quickly provided abundant funds, manpower and material resources to help businesses and society weather the impact. It has also initiated reconstruction work, as well as measures to stimulate demand and production, including community reconstruction, such as the post-921 quake projects.
Even though reconstruction can help raise national income and economic growth, the disasters have already reduced the wealth of the people of Taiwan. The impact of war will be much deeper and persist longer. Terrorism is not the only challenge facing the US, the locomotive of the global economy. The impact on the global economy of Washington's war against terrorism will also make it different from any past war.
For Taiwan, the recent disasters are akin to facing days of rain while living under a leaky roof. The major economies of the world are faced with recession. Adverse effects will be unavoidable in the short term. But the long-term results will depend on whether Taiwan can find appropriate strategies to tackle the many challenges and changes it faces.
The Executive Yuan should set up a special budget for post-Nari reconstruction and stimulate the economy by means of public investment. The Legislative Yuan should also speed up WTO-related legislation as well as those steps recommended by the advisory conference. However, the administration should not act beyond its remit and interfere with market mechanisms -- by using government funds, for example, to shore up the TAIEX.
These extraordinary times could very well be a good opportunity for Taiwan's economy to make self-adjustments. A crisis can be an opportunity, but that depends on how Taiwan's political parties, leaders and its people face up to the rapid changes both at home and abroad.
When it became clear that the world was entering a new era with a radical change in the US’ global stance in US President Donald Trump’s second term, many in Taiwan were concerned about what this meant for the nation’s defense against China. Instability and disruption are dangerous. Chaos introduces unknowns. There was a sense that the Chinese Nationalist Party (KMT) might have a point with its tendency not to trust the US. The world order is certainly changing, but concerns about the implications for Taiwan of this disruption left many blind to how the same forces might also weaken
As the new year dawns, Taiwan faces a range of external uncertainties that could impact the safety and prosperity of its people and reverberate in its politics. Here are a few key questions that could spill over into Taiwan in the year ahead. WILL THE AI BUBBLE POP? The global AI boom supported Taiwan’s significant economic expansion in 2025. Taiwan’s economy grew over 7 percent and set records for exports, imports, and trade surplus. There is a brewing debate among investors about whether the AI boom will carry forward into 2026. Skeptics warn that AI-led global equity markets are overvalued and overleveraged
Japanese Prime Minister Sanae Takaichi on Monday announced that she would dissolve parliament on Friday. Although the snap election on Feb. 8 might appear to be a domestic affair, it would have real implications for Taiwan and regional security. Whether the Takaichi-led coalition can advance a stronger security policy lies in not just gaining enough seats in parliament to pass legislation, but also in a public mandate to push forward reforms to upgrade the Japanese military. As one of Taiwan’s closest neighbors, a boost in Japan’s defense capabilities would serve as a strong deterrent to China in acting unilaterally in the
An elderly mother and her daughter were found dead in Kaohsiung after having not been seen for several days, discovered only when a foul odor began to spread and drew neighbors’ attention. There have been many similar cases, but it is particularly troubling that some of the victims were excluded from the social welfare safety net because they did not meet eligibility criteria. According to media reports, the middle-aged daughter had sought help from the local borough warden. Although the warden did step in, many services were unavailable without out-of-pocket payments due to issues with eligibility, leaving the warden’s hands
RSS