Posted on 19 Feb 2009
Taiwan`s gross domestic product (GDP) plunged 8.36% in the fourth quarter of 2008 and is forecast to shrink 2.97% further this year, both unprecedented declines, the Directorate General of Budget, Accounting, and Statistics (DGBAS), under the Executive Yuan (the Cabinet) said yesterday (Feb. 18).
The DGBAS estimated that the economy won`t resume positive growth until the fourth quarter this year, meaning that Taiwan will suffer five consecutive quarters of economic decline, the longest recession for the economy ever.
Due to economic decline and the devaluation of the NT dollar, per capita income is expected to drop to US$15,957 this year, down 9.38% from last year`s US$17,576 and equivalent to the 2005 level, according to the DGBAS.
Shih Su-mei, director general of DGBAS, noted that the impact of the global financial tsunami is much greater than that of the Asian financial storm in 1997 and the bursting of Internet bubble in 2001. She, though, stated that the economy has yet to reach the extent of depression, which is commonly defined as over 10% shrinkage of an economy from its last peak scale or three consecutive years of economic decline.
The economy would decline 5.74% this year, without the government`s economic stimulus measures, including the issuance of consumption coupons, the expansion of public infrastructural projects, tax cuts, and programs for augmenting employment, according to the DGBAS.
Due to the effect of wealth contraction, private consumption dipped, for the first time ever, 0.29% last year. Meanwhile, Taiwan`s economy is being threatened by the danger of deflation, as the consumer price index (CPI) is predicted to drop 0.82% this year, also a record.
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Tsai Hung-kun, director of the third bureau, DGBAS, pointed out that in view of the small and open nature of Taiwan`s economy, the shadow of deflation will be removed immediately once the global economy recovers.
