The Economy has Yet to Recover, the Government must Redouble Its Efforts

The Economy has Yet to Recover, the Government must Redouble Its Efforts
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
April 22, 2009

Next week the government will announce several March economic indicators. Barring unforeseen circumstances, the numbers will be generally be better than February, but worse than March last year. The exception may be the unemployment rate. But the government's financial and economic officials have already announced that "spring is here and the swallows have returned." The government's intention is obvious. It hopes to create a self-fulfilling prophecy. It hopes to use a slowing decline to inspire public confidence, and to ignite the flames of an economic recovery. But after a wild ride, the economy remains shakey. It is easy to make a bad judgment call. At the moment the market is still seeking the bottom. It is s much too early to talk of a recovery. Doing so may lead to a loss in vigilance, causing the economy to undergo additional cycles, making governance even more difficult.

Pitfalls await anyone attempting to analyze today's economy. The first pitfall is the stock market. The Taiex rose sharply following the Lunar New Year. Last Thursday the Taiex approached the 6000 mark, a level unseen since September 15 last year, when the financial tsunami struck. On Friday trading volume exploded. Since February trade volume has increased 35% percent. The stock market is reacting to future expections. It is viewed a key economic indicators. The wealth effect brought about by rising stocks will increase consumption and investment, in a virtuous circle. This is indeed one possible sign of economic rejuvenation. We may be experiencing a rebound or zero interest rate environment beneficial to the performance of the stock market. But the stock market is more and more like the stock market last May. The easing of cross-Strait relations offered hope for a peace dividend. The index peaked on the May 20 anniversary of the presidential inauguration last year, only to plummet afterwards. Investors need to keep a cool head.

The second trap is statistics. Officials often use these to mislead the public. For example, the current spin is "March is better than February." This involves claims that over the counter sales, stock market trade volume, and domestic exports have improved from one month to the next. But March had 10% more working days than February. Of course the numbers increased. Most analyses compare any period with the same period last year, usually a minimum of three months. One must not jump to conclusions based on monthly data. The indicators released this week include export orders, industrial production, unemployment rate, and money supply. No surprises are expected this month. But if added to the previous two months, they may be a better indicator.

The choice of indicators is also a trap that may affect judgments about the impact of various factors upon the economy. The key indicators government heads use when they say spring is here and the swallows have returned, include the stock index and export figures. The third, indicator, which was unmentioned, is consumer spending. Take exports. The rate of decline in March clearly slowed. But the first quarter decline was worse than expected. It is hard to interpret this as recovery in exports. Also, Taiwan re-exports much of what it imports. Import figures, especially the leading indicators for agricultural and industrial raw materials, show no improvement in export momentum. This is true even if one factors in falling imports and oil prices during the first quarter.

Among the seven leading indicators prepared by the CEPD, only the money supply increased. This was one of the results of a loose monetary policy. But another leading indicator, housing construction permits, calculated by area, fell three months in a row. It is currently less than half of what it was when the financial tsunami struck. As for the labor market, the figure for overtime hours per month is even lower. Industry has yet to stabilize. The remaining indicators were good in one month, bad in the next, indicating bottom-seeking. These indicators show that the economy is still at the bottom struggling to move up. For government heads to claim that spring is here and the swallows have returned is truly premature.

The business cycle must go through certain phases, especially following the major damage caused by the decline from the previous peak. The financial system was on the verge of collapse, rapidly increasing the ranks of the unemployed. Businesses were forced to close due to supply chain production shortfalls. These are among the challenges the economy must face while clawing its way back from the bottom. It is both difficult and time-consuming. Therefore one must not be so naive as to assume that as the economy falls, so it will rise. It is unlikely to recover as quickly as it fell during the SARS crisis. If one is careless, one may find oneself at the bottom again. Another lesson of this recession is that the Internet and globalization have accelerated the business cycle. Only businesses that can respond swiftly can survive. This is true for governments as well. Therefore, the government should not be in a hurry to turn in a report card. Instead it should intensify specific measures to revive the economy. This is the right way to ensure a steady recovery when one is at the bottom.

What shape will Taiwan's economic recovery take? Will it be a stable U-shaped recovery? Will it be a W-shaped recovery with a second dip? Or will it be an L-shaped long-term recession? The answer is uncertain, and the government must not take matters lightly.

景氣尚未復甦，政府仍須努力
【聯合報╱社論】
2009.04.20 02:02 am

未來這一周，政府要發布多項三月經濟指標，如無意外，大致會呈現比二月好、但比去年三月差的結果，唯一的例外可能是失業率。但在此之前，政府財經首長卻已預告景氣春燕飛回的好消息。政府的意圖明顯，期望借力使力，順著景氣跌勢稍緩的苗頭，以此激勵民間信心，點燃景氣復甦之火；但劇烈波動後的景氣走勢向不穩定，極易掉入判斷陷阱，目前僅能視為打底階段；且過早論斷景氣復甦，反將失去警戒之心，令景氣反覆，治理更棘手。

目前對景氣判斷存在幾個陷阱，第一個就是股市。今年農曆春節過後，台股漲勢凌厲，上周四股價指數一度攻上去年九月十五日金融海嘯爆發時的六千點大關，周五爆量長黑，但二月以來漲幅仍高達三成五。以股市反應未來經濟預期的特性，被視為景氣即將好轉的關鍵指標；而股價上漲帶來的財富效果，也會引動消費投資增加的正向循環。這確是景氣回春的可能跡象之一，無論是跌深反彈或零利率環境，均有利股市表現；但近來的台股愈來愈像去年五月的台股，因特有的兩岸關係和緩而存有和平紅利的想像空間，加以五二○總統就職周年將屆，去年五月台股衝上最高點後反轉下挫的過程，值得投資人冷靜思考。

第二個陷阱是數據的比較基準，也是最常被官員誤用、以致誤導民眾的方式。例如近來最常見的說法就是三月比二月好，包括上市櫃公司營收、股市成交量、出口值等，強調一月比一月好；但三月工作天數本來就比二月多一成，數量成長是理所當然。一般觀察趨勢的比較方式是與去年同期相比，而且至少應連看三個月，不應以單月數據遽下論斷。因此，本周公布的指標如外銷訂單、工業生產、失業率、貨幣供給額等，儘管單月結果不會有太多意外，但與前兩月連在一起觀察，將可提供更有用的景氣動向訊息。

指標的選用，也是影響景氣判斷的陷阱之一。政府首長用以研判景氣春燕歸的主要指標，除了股市，還有出口，尚未現身的第三隻燕子是消費。以出口來說，三月跌幅明顯縮小，但第一季衰退幅度卻比預期還大，實難謂出口景氣復甦；此外，由於台灣經濟的進口加工再出口結構高，進口額、尤其是農工原料的變化更具指標領先性，但首季進口額竟是腰斬，即使剔除油價下跌因素仍呈大減，未見出口好轉的勢頭。

再者，依據經建會編製的領先指標，其七項指標中，只有貨幣供給額連三月上升，這是寬鬆貨幣政策的效果之一；但做為房市領先指標的建照核發面積，則是連三月下降，目前水準還不到金融海嘯爆發時的半數；至於勞動市場，每月加班工時已是連七降，尚未見企穩之象；其餘指標，則是一月好、一月壞的反覆打底之勢。這些指標顯示，景氣尚在底部掙扎向上，政府首長的景氣春燕說，實在是說得太快了。

景氣循環有其一定的過程，尤其是這波自高峰急速摔落造成的重大破壞，例如奄奄一息的金融體系、急速增加的失業人口，以及部分企業被迫退場導致的生產供應鏈缺口等，都是景氣自谷底爬升時要面對的重重挑戰，不只困難，更需要時間，因而不能天真地以為景氣怎麼跌下去、就怎麼升上來，更不會像前波ＳＡＲＳ導致的不景氣般快速復元，卻可能是稍有不慎，就又掉回谷底。這波不景氣的另一啟示是，網路傳播及全球化等兩大因素，已讓景氣循環的波動加劇加速，能快速應變的企業才能生存，政府亦然。因此，政府別急著為施政找績效，而是加緊落實各項既定的振興經濟方案，才是讓打底中的景氣穩定回升的正確態度。

台灣的景氣復甦形式，是回升後穩定向上的U、復甦後再衰退的W，還是陷入長期衰退L，尚在未定之天，政府可別掉以輕心。