On Friday, Singapore’s latest economic data showed its economy contracted for a second consecutive quarter in the third quarter, bringing the city-state to the brink of recession. This news was all the more worrisome because Singapore was the first nation in the region to release third-quarter GDP figures and its performance can shed some light on Taiwan’s export-oriented economy.
The Ministry of Finance said on Tuesday that exports dropped 1.6 percent year-on-year last month to US$21.85 billion. The decline, the first in more than six years, was a surprise to industry watchers because it was a sharp reversal from an export growth of 18.4 percent in August and showed an across-the-board weakness in the country’s major export markets, especially China (including Hong Kong), which President Ma Ying-jeou’s (馬英九) government hopes will re-energize Taiwan’s economy.
A closer look at the export data showed Taiwan’s trade surplus dropped 74.3 percent to US$810 million last month from the same period last year. Moreover, in the third quarter, the surplus fell 90 percent to US$460 million from the second quarter’s US$4.72 billion and 86 percent from the first quarter’s US$3.3 billion. This has alarming implications for GDP growth in the fourth quarter, not to mention the whole year.
Given the escalating global financial turmoil, the central bank cut its policy rate from 3.5 percent to 3.25 percent on Thursday, following other central banks’ efforts to preemptively stem liquidity problems. Central bank Governor Perng Fai-nan (彭淮南) admitted that the risk of economic drawback domestically has increased.
While Perng emphasized that the economy was not at risk of a recession, the latest economic forecast for Taiwan by the IMF — along with other predictions made by various foreign brokerages — show Taiwan is facing growing headwinds.
On Wednesday, the IMF sharply cut its forecast for Taiwan’s economic growth next year from its 4.1 percent prediction in April to 2.5 percent on the back of the global downturn. However, in its latest World Economic Outlook, the fund said Taiwan’s economy was likely to grow 3.8 percent this year, up from its April estimate of 3.4 percent.
On Thursday, Standard Chartered Bank lowered its forecast for Taiwan next year from 4.8 percent to 3.1 percent, after Deutsche Securities cut its forecast from 3.3 percent forecast in June to 1 percent.
The benchmark TAIEX has plunged nearly 40 percent since the beginning of this year. No one knows when the market will bottom out. So Taiwan is unlikely to achieve the Ma administration’s target of 4.3 percent growth this year and 5.08 percent next year.
Finally, Minister of Economic Affairs Yiin Chii-ming (尹啟銘), who once predicted the TAIEX could rise to 20,000 points under the new government, said on Thursday that the public would suffer at least another year of hardship amid the current global financial crisis.
Yiin’s words were a reminder of what then minister of economic affairs Lin Hsin-yi (林信義) said eight years ago — the public needed to be prepared for days of hardship in 2001. Lin’s words were followed by a record GDP contraction of 2.17 percent in 2001.
As a spate of recent government measures have failed to boost market confidence, people have to wonder how far away we are from a repeat of 2001.
US president-elect Donald Trump continues to make nominations for his Cabinet and US agencies, with most of his picks being staunchly against Beijing. For US ambassador to China, Trump has tapped former US senator David Perdue. This appointment makes it crystal clear that Trump has no intention of letting China continue to steal from the US while infiltrating it in a surreptitious quasi-war, harming world peace and stability. Originally earning a name for himself in the business world, Perdue made his start with Chinese supply chains as a manager for several US firms. He later served as the CEO of Reebok and
Chinese Ministry of National Defense spokesman Wu Qian (吳謙) announced at a news conference that General Miao Hua (苗華) — director of the Political Work Department of the Central Military Commission — has been suspended from his duties pending an investigation of serious disciplinary breaches. Miao’s role within the Chinese People’s Liberation Army (PLA) affects not only its loyalty to the Chinese Communist Party (CCP), but also ideological control. This reflects the PLA’s complex internal power struggles, as well as its long-existing structural problems. Since its establishment, the PLA has emphasized that “the party commands the gun,” and that the military is
US$18.278 billion is a simple dollar figure; one that’s illustrative of the first Trump administration’s defense commitment to Taiwan. But what does Donald Trump care for money? During President Trump’s first term, the US defense department approved gross sales of “defense articles and services” to Taiwan of over US$18 billion. In September, the US-Taiwan Business Council compared Trump’s figure to the other four presidential administrations since 1993: President Clinton approved a total of US$8.702 billion from 1993 through 2000. President George W. Bush approved US$15.614 billion in eight years. This total would have been significantly greater had Taiwan’s Kuomintang-controlled Legislative Yuan been cooperative. During
US president-elect Donald Trump in an interview with NBC News on Monday said he would “never say” if the US is committed to defending Taiwan against China. Trump said he would “prefer” that China does not attempt to invade Taiwan, and that he has a “very good relationship” with Chinese President Xi Jinping (習近平). Before committing US troops to defending Taiwan he would “have to negotiate things,” he said. This is a departure from the stance of incumbent US President Joe Biden, who on several occasions expressed resolutely that he would commit US troops in the event of a conflict in
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