Economic Headwinds Ahead: Ma Government Must Respond

Economic Headwinds Ahead: Ma Government Must Respond
United Daily News Editorial (Taipei, Taiwan, ROC)
A Translation
August 7, 2015

Executive Summary: The Comptroller General's Office announced last week that the Republic of China's economic growth rate fell to 0.64% in the second quarter, far lower than the former estimate of 3.05%. This sharp decline in economic growth signals an abrupt reduction of estimated growth from 3% to 2%. It means an economic headwind is blowing.

Full Text Below:

The Comptroller General's Office announced last week that the Republic of China's economic growth rate fell to 0.64% in the second quarter, far lower than the former estimate of 3.05%. This sharp decline in economic growth signals an abrupt reduction of estimated growth from 3% to 2%. It means an economic headwind is blowing.

During the first half of the year, heads of government ministries charged with fiscal and economic affairs repeatedly predicted economic development taking a turn for the better in the second half, and make up for an underperforming first half. But August is already here, and economic indicators still show no sign of improvement. It is increasinly hard to be optimistic. The chill economic winds are mainly due to the twin impact of an export recession and weak domestic demand. The Ministry of Finance announced import and export statistics today. Estimates are that July exports will perpetuate the six month long recession. They will reach the lowest point for exports since the "Six Straight Lows" of 2012.

Taiwan's export decline is due mainly to the weak global economic recovery, the crowding effect of Mainland China's red supply chain, lower crude oil prices, and weakening domestic petrochemical product exports, all of which are interconnected. Economists worry that Taiwan's export declines cannot be remedied by short-term policies. The problem will only become more serious. Downturns in Taiwan's exports have become more frequent in recent years. In the past, export slumps occurred every four or five years. Now they are occuring every three years.

Take domestic demand. Excess savings will rise to 15.52%, a 28 year high. Ultra high savings rates means that the private sector cannot find anywhere to invest their capital. No matter where they park their money, it remains idle. Because private investment and government investment were insufficient, excess savings increased nearly a trillion dollars over the past year. This money cannot be turned into engines of economic growth.

The second half was supposed to be high season for exports. But Taiwan's exports encountered economic headwinds. Domestic demand also cooled. FSC Chairman Tsao Chung-ming said he was "surprised as hell". The Executive Yuan convened an emergency meeting of ministries. They proposed measures to save the economy, generated few sparks. The Executive Yuan proposed "Measures to Strengthen the Economy". They included three measures: industrial upgrading, export expansion, and investment promotion. Premier Mao Chi-kuo set the tone. The "Measures to Strengthen the Economy" would be a "midterm review and reinforcement of existing programs". But these are apparently old hat, and offer nothing new.

The public expects much from the business sector. Of course it expects more than mere "review and reinforcement". It expects a spark of hope, along with genuine initiative. In recent years, government plans to rescue the economy were often confined to shouting slogans about industrial upgrading and export expansion. These were invariably ineffective. People experienced no sense of economic revitalization. One reason, as Premier Mao noted, was that industrial restructuring is a long-term project. It will not yield immediate results. But a bigger problem is that the Ma government and the Mao cabinet are apparently already "in transition". They have apparently begun sitting out the last days of their administration. They have thrown in the towel, lost all ambition, and are merely biding their time.

Admittedly, the Ma government's appointment of officials charged with fiscal and economic affairs was bungled. It was a main contributor to economic stagnation. We are not talking about government guidance for industry, or the allocation of national resources for certain industries. We are saying that the current fiscal and economic brain trust is simply not up to the job. It does not understand Taiwan's economic advantages and disadvantages. How can it be expected to make far-sighted decisions about Taiwan's economic future? During the boom years, the Ministry of Economic Affairs and the Council for Economic Planning And Development played the role of locomotive. Today however, the Ministry of Economic Affairs is clueless. The CEPD has been restructured and upgraded. It is now known as the National Development Council or NDC. Its most visible function appears to be economic forecasting.  Without a locomotive at the head, how can any train generate economic momentum?

As Central Bank President Perng Huai-nan suggested, when the economy is bad, the government should implement an expansionary fiscal policy. The priority should be domestic public works. Next year the government's public works budget will increase from 177.2 billion NT, to over 180 billion NT. To make proper use of this budget, the government must have more accurate planning. The Public Works budget for next year must allow for the construction of sewers, improvement of farmland hydraulic projects, reinforcement of unsafe school buildings and other infrastructure. These include improvements to airport transit, the Suhua Highway, the west coast expressway, the Kaohsiung underground railway, and other major public works projects. We must improve construction quality and remain ahead of schedule, so that the public and businesses will be properly served. State-owned enterprises should also increase domestic investment. Taipower should phase out old, polluting generators. In particular, it should encourage industrial investment in the emerging energy industry. Not only should it promote investment. It should also address the cumulative effects of air pollution.

In order for Taiwan to survive the economic winter, the government must act. It must have both short and long term plans. It must pay attention to domestic opportunities. Publc works projects must help the common man. The government must implement economic policies with tangible results in order to win public support.

經濟大逆風來襲 馬政府不能再坐而談

2015-08-07聯合報

主計總處上周公布我國第二季經濟成長率跌為○．六四％，遠低於原先預估的三．○五％。如此大幅下滑，我國今年經濟成長形勢頓時由「保三」變成「保二」，這已預告了經濟大逆風的來臨。

今年上半年，政府財經部會首長多次預告：下半年台灣經濟發展可望逐漸轉佳，彌補上半年成長火力的不足。但時序已進入八月，各項經濟指標仍然未見好轉的跡象，情勢難以樂觀。這一波景氣寒風，主要受「出口衰退」與「內需不振」的雙重影響。財政部預訂今天公布進出口統計數據，而各界預估七月出口將出現連續第六個月衰退，這將是繼二○一二年台灣出口「連六衰」之後，出口再陷低潮。

台灣出口衰退，主要是受全球景氣復甦力道疲弱、中國大陸紅色供應鏈排擠影響，加上原油價格走跌，國內石化相關產品出口轉弱，在在皆互為關聯。經濟學者普遍憂心，台灣出口非短期政策能救，未來挑戰只會愈來愈大。更值得注意的是，近年台灣出口陷入低潮的循環周期有縮短的趨勢，過去每隔四、五年會有一波出口低潮，但現在周期逐漸降至三年。

在內需方面，我國超額儲蓄率將攀升至十五．五二％，是廿八年來的新高。超高額儲蓄意味，民間資金找不到投資方向，資金放在那裡變成呆錢。由於民間投資與政府投資均不足，今年超額儲蓄將比去年增近兆元，但這些錢都無法化為經濟成長的動力。

下半年原本應逐漸進入出口旺季，但台灣出口卻吹起了逆風，內需景氣也飄來陣陣寒意。對此，金管會主委曾銘宗以「跌破眼鏡」形容，行政院亦緊急召集各部會提出搶救經濟措施，但會中卻未激起什麼火花。行政院提出的「經濟體質強化措施」，分為產業升級、出口拓展與投資促進三個面向，閣揆毛治國定調，這次的經濟體質強化措施，是「現行方案的期中檢討與補強」；但這些看起來大抵都是老調，毫無新意。

民眾與企業界期待的，當然不只是「檢討與補強」，而是要拿出有亮點、帶有動力的積極作為。回顧近年來政府拚經濟的模式，常喊的口號是產業升級與出口拓展，但始終成效不彰，使民眾對拚經濟日漸無感。其中原因，固有如毛揆所言「產業結構的調整是長期扎根的工程」，非一時能見其效；但更大的癥結是，馬政府及毛內閣上下似乎瀰漫著「過渡」心態，只求安然度過執政的最後階段，而失去抓緊時機、追求作為的企圖心，不斷坐視時機流逝。

不可否認，馬政府財經部會用人布局的失當，是造成經濟動能不足的主因之一。我們談的，並不是政府要如何對產業下指導棋，或將國家資源優先分配用於發展某些產業等；而是目前整個內閣的財經大腦，根本不足以對台灣經濟的優劣作出有效分析，遑論對未來的發展作出前瞻的規劃。在經濟起飛年代，經濟部和經建會扮演著火車頭的角色；而如今，經濟部不知所為何事，至於由經建會改制升格的國發會，最明顯可見的功能似乎只在發表景氣預測。失去火車頭的前導，經濟列車怎麼會有足夠動力？

一如央行總裁彭淮南的建議，當經濟不好時，政府應實施擴張型的財政政策，優先將預算用於國內公共建設。明年政府的公共建設預算，從原先的一七七二億元提高至一八○○餘億，如何善用這筆預算，政府必須有更精準的規畫。明年的公共建設預算，除推動興建下水道、改善農田水力建設與危險校舍耐震補強等常態項目，包括機場捷運、蘇花公路與西濱快速道路改善、高雄市鐵路地下化等重大公共建設，政府應加強施工品質並設法提前完工，讓民眾、企業享受公共建設的便利。此外，也應評估推動國營事業增加國內投資，鼓勵台電提前汰換老舊、高汙染的發電機組，尤其應鼓勵產業投入新興能源產業，既促進投資，也改善長年積累的空汙問題。

要讓台灣度過這一波景氣寒冬，政府不能只是坐而談，必須長短期並進，重視內需商機，建設項目則要能貼近庶民需求，必須要「有感救經濟」，才能獲得全民支持。