Although the Directorate-General of Budget, Accounting and Statistics (DGBAS) has been continuously revising its economic growth forecast for this year upward since November, the public’s concern about a growing disparity between rich and poor is overshadowing the government’s cheery GDP forecast.
On Thursday, the DGBAS reported strong economic growth in the second quarter and raised its full-year growth forecast to 8.24 percent, higher than the 6.14 percent predicted in May, and the highest in two decades.
The statistics agency’s GDP growth forecast was followed by a prediction from the Ministry of Economic Affairs on Friday that the amount of export orders is likely to reach a record high this year and exceed US$400 billion, compared with US$322.4 billion last year.
Also on Friday, a central bank report showed that Taiwan’s second-quarter balance of payments surplus increased 14.8 percent to US$15.38 billion from US$13.4 billion in the first quarter, and was up 30.12 percent from US$11.82 billion a year earlier, indicating that strong exports and net fund inflows have boosted the central bank’s foreign exchange reserves during the period.
Taiwan’s faster-than-expected recovery from the global financial crisis has been spurred on by both domestic investment and exports, but weakening growth in some parts of the world during the second half of this year and a still-high unemployment rate at home could pose new challenges for the economy. In addition, a rising balance of payments surplus could lead to appreciation pressure on the NT dollar, thus posing a threat to the nation’s export-reliant economy.
However, it is the growing disparity in our society that people are most concerned about, rather than GDP growth. The statistics released by the DGBAS showed that the household income gap widened last year, with the average annual disposable income of the most prosperous 20 percent of the population — those who earn around NT$1.79 million (US$56,100) — reaching 6.34 times that of the poorest 20 percent. That was the highest since 2001, when the factor was 6.39. Without factoring in the government’s social welfare subsidies and tax benefits, the gap factor surged to an all-time high of 8.22 last year.
The DGBAS said the widening wealth gap was the result of the global financial crisis, which led to record-high unemployment in Taiwan last year. That explanation is only partly true.
The growing inequality in wealth distribution has more to do with the nation’s distorted tax system, which favors the rich rather than the poor. It also has to do with the persisting practice of triangular trade, in which manufacturers receive orders in Taiwan, but produce the goods at their offshore plants in order to keep costs down and maximize profits. This practice generates jobs overseas, but it does not help the situation here. Without more jobs to help improve stagnating wages, how is it possible to see wealth distributed equitably in this country?
This problem of economic disparity has raised concerns about social justice — a growing sentiment of social injustice among people will simply lead to potential conflicts in our society. If the problem worsens, Taiwan’s economic prosperity would be nothing but a mirage as most people will see their incomes fall, and they will not be satisfied with this unfair distribution of wealth.
If the government is still too engrossed by the attractive growth figures to examine the dark side of the recent trade pact with China or to deal with the widening economic disparity by reviewing Taiwan’s industrial policies and economic structure, the Chinese Nationalist Party (KMT) is merely showing that while it knows how to win votes, it knows nothing about how to govern.
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