Asia Times: It's not a pretty picture in Taiwan


	August 21, 2001	atimes.com

China

It's not a pretty picture in Taiwan

TAIPEI - Taiwan's economic growth has dived to a historic low, according to government statistics released on Friday and the worse-than-expected economic performance is considered by a local economist the start of a recession.

Lin Chuan, director-general of the Directorate General of Budget, Accounting and Statistics (DGBAS), announced on Friday that economic growth dipped to minus 2.35 percent in the quarter ending in June, the lowest level for any single quarter since 1975.

Owing to the second quarter's poor performance, Lin said whole-year growth will be pushed down to minus 0.37 percent, the only negative expansion since the government began to compile statistics in 1952. Lin pointed his finger at sagging demand both at home and abroad as the culprit for the economic plunge.

Taiwan's exports, which are the lifeline of the island's economy, are made up of mainly high-tech products and depend heavily on the United States market, and are therefore particularly vulnerable to the economic slowdown in the United States, according to Lin. Since there is no sign that the US market is turning around, Lin forecast that the island's economic growth will keep shrinking in the third quarter to minus 2.45 percent before "surging in the fourth quarter to 2.38 percent."

The ramifications of decreasing exports are gradually trickling down, with the stock market trade volume down by 47 percent in the first quarter and 59 percent in the second quarter, Lin said. Other ramifications include rising unemployment and a sharp reduction in consumption and investment, which in turn aggravate the economic slowdown, according to Lin.

According to the DGBAS statistics, the island's whole-year exports will plunge by 14.88 percent, while imports will plummet by 19.13 percent, both records in terms of the extent of reduction.

The dismal figures prompted an economist at the Shihsing University, Taipei, to warn that the island is crossing the threshold into economic recession. Professor Liang Kuo-yuan said Taiwan's economy is sinking into recession according to the rapid pace, big extent and long period of the current slump.

The economy has been in the doldrums for more than a year and the growth rate has turned around from 3.82 percent in the fourth quarter of last year to 1.06 percent in the first quarter and minus 2.35 percent in the second quarter, which represents an unprecedented rapid dive, the fallout from which has spread to more and more industries, Liang said.

Meanwhile, the global and local economic woes have brought a chilly winter to employees of Taiwan businesses, with even those working for companies listed on the Taiwan Stock Exchange (TSE) worrying about their job security. The results of a survey conducted by the Chinese-language Business Weekly among TSE listed companies last week indicates that one-sixth of those companies polled will lay off personnel as part of their belt-tightening measures.

The business magazine recently sent questionnaires to 794 listed companies and received 354 replies. Among the respondents, 72.9 per cent said they have adopted such cost-saving measures to counter the effects of Taiwan's sluggish economy.

While reducing personnel expenses is an important cost-saving measure that has been adopted by many companies, 32.7 percent of the respondents said they have frozen the number of employees on the payroll, 16.6 percent have laid off personnel, and 11.5 percent have applied early retirement measures. The survey report also showed that the most probable targets of company layoff programs are those aged over 50, those who have worked with a company for more than 20 years, and those who hold middle-level positions.

Employees with professional skills, a good working attitude, foreign language abilities, and a spirit of teamwork are more secure from losing their jobs, according to the survey.

Nearly 60 per cent of the respondents said that they have no plans to hire additional personnel even when Taiwan's economic prospects make a turn for the better. For new recruitment plans, priorities will be given to sales personnel and technical workers.

The survey was conducted in early August. In addition to questionnaires, the magazine also conducted telephone interviews with executives of the surveyed companies.

(Asia Pulse)

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