With the campaign offices of candidates for the year-end elections established and the election season soon to heat up, there is likely to be a lot of positive news or policy initiatives produced by the government to create pro-Chinese Nationalist Party (KMT) sentiment. However, voters deserve and demand to know more details.
Last week, the Cabinet’s Directorate-General of Budget, Accounting and Statistics (DGBAS) revised its GDP growth forecasts for this year and next year, saying the economy would stay on track for a modest recovery at the expected pace of 3.41 percent this year and 3.51 percent next year.
If achieved, the new GDP growth forecasts will be the highest in the past three years. Yet the figures sound too good to be true and people should be skeptical of the numbers, because the statistics agency adjusted upward its estimates partly on the expectation of greater contribution from Apple Inc’s new iPhones, while blatantly dismissing other negative factors.
US forecast firm Global Insight Inc has recently revised downward its GDP forecasts for China, Japan and the US, but the DGBAS remains confident that the nation’s economic momentum is set to pick up steam significantly this quarter as the upcoming launch of new iPhones is expected to maintain the nation’s external demand, because Taiwan has long been home to many of Apple’s product assemblers and key component suppliers.
Overall, the nation’s exports are forecast to expand by 3.21 percent this year and 4.09 percent next year, after growing 1.41 percent last year, according to the statistics agency.
However, what the agency did not take into account, is first, strong demand for new iPhone products might threaten consumers’ budgets for other electronics and crimp shipment growth for non-Apple component suppliers. Second, Apple’s contribution to gross national product (GNP) might be big, but its contribution to GDP could be smaller than expected because the calculation of GDP does not include Taiwanese suppliers’ offshore production, mostly in China. Third, sales of new iPhones might fail to live up to market expectation and its sales boom might not sustain long enough to influence growth.
There is no direct evidence that the DGBAS was trying to fudge its GDP growth forecasts, although the government is undoubtedly under pressure to attain its 3.2 percent economic growth target for the year. Yet the statistics agency’s dismissal of potential impacts of the July 31 and Aug. 1 gas pipeline explosions in Greater Kaohsiung and the US Federal Reserve’s upcoming interest rate hikes have raised many economists’ eyebrows and invoked concerns about the reliability of government statistics.
What people ought to hear is whether the local petrochemical industry’s output, domestic consumption and tourism income in Greater Kaohsiung is to be negatively affected by the explosions. Also, they must know if the nation is capable of withstanding the consequences of potential capital outflows from Asia, as foreign funds are to pull out to meet redemption demand in home markets or to take shelter in the US currency, once the Fed starts interest rate hikes, likely to occur next year.
The election season is coming, but there is no reason for state statisticians not to thoroughly examine all possible elements when making estimates, to ensure that forecast methods strictly adhere to international standards.
Even if the DGBAS’ “true” forecasts might embarrass the government, that is not cause to neglect its duty. Telling partial stories of the nation’s situation will not help people build confidence in the economy, but it certainly puts the statistics agency’s credibility to the test.
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