According to the US Bureau of Economic Analysis, real GDP grew 3.5 percent in the US in the third quarter from the preceding quarter, though the change from the third quarter last year was minus 2.3 percent.
Most people do not really care how economists interpret recovery from crisis because governments and businesses worldwide are so eager to celebrate good news after suffering through a grim period amid much criticism. And the news does seem good — but ordinary people are far from living happily ever after. The damage caused by the crisis is still apparent and will endure for some time if certain goals are not adequately planned for and pursued.
Economists have been discussing how the 2008-2009 financial crisis might introduce a paradigm for resolving anomalies in growth models now that the old way has been shown to be incapable of meeting new challenges. Challenges facing vulnerable groups are more serious than before, however, as signs of recovery have yet to appear in the job market and across quality of life indices.
We therefore need a new economic and social paradigm that addresses not only macroeconomic recovery, but also a more balanced, inclusive and sustainable mode of growth.
As a member of APEC, Taiwan ought to pay closer attention to these issues, which have ramifications both domestically and internationally.
Stimulus packages among APEC members include expansionary fiscal policies and looser monetary operations. These have had gradual positive effects. Signs of recovery are becoming more noticeable.
At this critical moment, however, when and how to end economic intervention are the key issues.
We are all aware that economic policies can exert positive and negative effects, and we certainly do not wish to resolve this crisis by inducing another bubble. Central bank Governor Perng Fai-nan (彭淮南) said last month that property speculation could rise in the wake of lower interest rates and that the financial sector should monitor the situation carefully. Indeed, it is essential to coordinate public and private decision-making and set rates at a level that will not backfire for investors.
The structure of the global economy has changed, regardless of what governments have done in response to economic instability. Before the crisis, there was a significant trans-Pacific imbalance, which was largely the result of uneven savings and investment in the Asia-Pacific region. Although an exit strategy is important, some policies should be retained to help strike a balance between savings and investment.
Taiwan should strive to move away from reliance on external demand and toward reliance on internal demand. After all, it is commonly argued that Asian consumption and investment will play a more important role in the new global economic arena.
The financial crisis has impacted on economic and social development — and vulnerable socioeconomic groups in particular. It is difficult to comfort the jobless by offering optimistic forecasts; unemployed people simply want their jobs back.
Vulnerable groups need to be better protected. Appropriate action that addresses the impact of APEC policies belongs to two categories: structural reform and social resilience enhancement.
Promoting structural reform can provide equal economic opportunities to all, in addition to reducing transaction costs and stabilizing growth. Enhancing social resilience — improving welfare nets, for example — can help vulnerable groups regain the confidence that was shattered by the economic crisis and ease their reluctance to consume. The road ahead for growth requires inclusiveness and taking better care of all stakeholders.
In its most recent report, the Directorate-General of Budget, Accounting and Statistics said the unemployment rate was 6.04 percent, or 661,000 people. This compares with an average of 450,000 jobless people last year; clearly, it’s time for the government to do something.
Balanced and inclusive growth can be sustainable. Such growth needs to satisfy the needs of the current generation without compromising those of future generations. For this reason, everyone must work hard to ensure that negotiations on the UN Framework Convention on Climate Change in Copenhagen reach workable conclusions. Taiwan is not a member of the UN, but it is a part of this planet; it should support any initiatives that will sustain life on Earth.
It is important to address climate change, but it is also important to eliminate unnecessary trade barriers relating to environmental goods and services. In so doing, valuable resources can be better preserved and optimally allocated. Public-private partnerships within and between nations through APEC would be a feasible way of coordinating efforts that target sustainable growth.
Again, Taiwan should not be absent from this process. In addition to optimistic economic data, there is a desire for an equilibrium in which growth is balanced across all macroeconomic sectors, thus leading to acceptance across an entire society while fulfilling environmental responsibilities.
Darson Chiu is an associate research fellow and Pei-chen Liu is an industry consultant at the Taiwan Institute of Economic Research.
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