Long- and short-term threats undermine Taiwan economy

Subject

The (gloomy) economic outlook for Taiwan.

Significance

Taiwan's exports fell 8.8% year-on-year during the January-August period, data showed on September 7. Exports, which equal around 60% of GDP, have now fallen for seven consecutive months. GDP growth plummeted to 0.52% in the second quarter of 2015, from 3.84% in the first. The government forecasts 1.56% growth for the calendar year 2015, the lowest since 2010.

Impacts

• The pessimistic export outlook will dampen Taiwan's stock market performance, especially for manufacturing companies.
• Downward pressure on wages will restrain people's propensity to consume, dragging down growth prospects for private consumption.
• Economic sluggishness will put the ruling party, the Kuomintang, at a disadvantage in January's presidential election.