It seems that the nation’s economy, which has been giving warning signs for some time, is in a poor state.
Directorate-General of Budget, Accounting and Statistics Minister Shih Su-mei (石素梅) has said the original forecast for GDP growth for the third quarter was only 0.1 percent, but it is now expected to go be negative. If this is true, then the annual GDP growth this year would have trouble even reaching 1 percent.
That the TAIEX until Oct. 1 could maintain a level above 8,300 points has to be regarded as a miracle, because the economies of major nations around the world are suffering, with growth forecasts having to be adjusted downward almost every month.
In the US, the Dow Jones fell from 18,000 points to 16,000 points and in Germany, the DAX fell from 12,000 points at the beginning of the year to 9,000 points. In Japan, India and China, local stock exchanges fell from 19,000 to 17,000 points; 28,000 to 25,000 points; and 5,000 to 3,000 points respectively.
Considering how the stock markets in major nations have fared, the fact that the TAIEX only fell 700 points, from 9,000 to 8,300, during the same time period suggests that Taiwan is actually holding up quite well and doing better than others. You would think that this would be a cause for celebration.
The trouble is, Taiwan is a relatively small, deregulated economy and the state of the global economy has a considerable effect on it.
There are other ways of interpreting the TAIEX’s ability to remain above 8,300 points.
The first is that the government, in an attempt to cover up for the incompetence of President Ma Ying-jeou’s (馬英九) administration, has had to raid the pension fund to artificially bolster the stock market. The Ma administration is completely oblivious and entirely unaware that it has kept the market at an unreasonable level.
The second reason is that the apparent health of the TAIEX is concealing the poor state of the economy and is luring clueless investors to invest in the stock market. If investors suffer big losses when the whole thing comes tumbling down, it would be because they did not know how to invest and would have nothing to do with the Ma administration’s complete lack of ability to steer the economy.
The third reason is related to January’s presidential and legislative elections, and to the low morale among members of the Chinese Nationalist Party (KMT).
Should the TAIEX fall below the 8,000 mark at this juncture, the popularity ratings of the KMT’s current — albeit perhaps merely caretaker — presidential candidate, Hung Hsiu-chu (洪秀柱), might fall well below 10 percent. The fear is that, if this were to happen, the party would hemorrhage seats, leaving it with less than half the number of seats in the legislature that it has now.
When the current situation is evaluated from this perspective, it becomes easier to see why the Ma administration might be keen to conceal the true state of the economy.
Kuo Chen-hero is an adjunct professor in the School of Business at Soochow University.
Translated by Paul Cooper
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