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The global upswing in the prices of raw materials and oil, the hurricane
disaster in America, and the pressure to increase interest rates
in 2005 all conspired to cause the global economic recovery to be
weaker than that in 2004. Nevertheless the price of oil began to
stabilize from US$70 in September 2005 for New York futures to US$58
in November 2005, while OPEC crude oil also dropped to US$50. As
energy cost pressures have somewhat subsided, the global economy
is forecasted to maintain its basic growth.
According to the forecast published by Global Insight Inc. in
October 2005, the global economic growth rate would be about 3.4
percent. And if the U.S. economy were to maintain steady and healthy
growth, with Japan continuing to show revival, the economy of the
European Union performing steadily, and the Chinese economy maintaining
its strong growth, then global economic growth in 2006 could also
maintain at 3.4 percent.
According to the report of the Statistic Section of the Executive
Yuan, Taiwan’s unemployment rate abated during the first half of
2005 with steadily increasing daily consumption. Partly due to the
construction and installation of new factories and equipment in
the hi-tech industries, as well as the import of civil aviation
aircraft and high speed trains, private investments were able to
maintain growth. However because of the slow down of the global
recovery and the flight of manufacturing capabilities, Taiwan’s
exports were affected. Hence, Taiwan’s overall growth rate during
the first half of 2005 was merely 2.73 percent.
However, with the rise in production and increase in exports,
as well as the quickening pace of the government’s expenditure in
infrastructure construction, preliminary statistics reveal that
the growth rate during the third quarter was 4.38 percent, with
the growth rate for the fourth quarter forecast to rise to 5.28
percent. Thus it is expected that the overall economic growth rate
for the second half of 2005 will be 4.83 percent with the growth
rate for 2005 hitting 3.80 percent. In terms of commodity prices,
with food prices seeing an increase as a result of climatic disruption
and increasing influence of exports to Mainland China, it is projected
that Taiwan’s consumer price index (CPI) will rise by 2.2 percent.
In terms of the wholesale price index (WPI), despite the higher
prices of international crude oil and industrial materials compared
to those in 2004, the appreciation of the New Taiwan Dollar managed
to offset the price increases, with the result being that the WPI
is estimated to rise by 0.9 percent for 2005.
As the projected global economic growth rate for 2006 is similar
to that in 2005, Taiwan’s imports and exports should also see steady
growth. Furthermore, with improvement in employment, private consumption
would also rise steadily. Nevertheless as the import of civil aviation
aircraft will have passed it peak, along with the uncertainty of
new investment plans for the hi-tech industries and a rise in comparative
base, it is estimated that private investments in 2006 will gradually
decline. On the other hand, governmental investments driven by expanded
public infrastructure construction planning will continue to grow,
while investments in state-run enterprises will decrease due to
privatization.
The increase in international prices for raw material for 2006
has been forecast to slow down. However the NTD is also forecast
to continue to depreciate, with the result that the WPI will rise
by 3.1 percent. Due to the intense competition among industries
and the sustained effect of structural elements during the opening
up of the market, it is estimated that the CPI will increase slightly
by 1.5 percent.
Taiwan’s economy had been transformed from one of agriculture
and export processing in the early days to that of operation, design
and manufacturing (ODM) for the semiconductor, machine, communication
hardware, and all kinds of other industries, for which she is so
well known around the world. In 2004, Taiwan’s agricultural production
value accounted for less than two percent of GDP, while the manufacturing
production value accounted for thirty percent, and the service production
value accounted for sixty-eight percent. Currently, Taiwan ranks
among the top twenty countries or regions in the world in terms
of foreign investment.
In terms of foreign trade, Taiwan ranks as the world’s fifteenth
largest trading nation (WTO, 2005), and its trade complementary
index with the other rising East Asian countries is foremost in
the Asia-Pacific region (assessed by World Bank in 2003). This indicates
that Taiwan has become an important link in the industry supply
chain in East Asia, with optimistic trade cooperation prospects
with neighboring countries. In May 2005, Business Week published
a special report titled “Why Taiwan Is So Important,” arguing that
Taiwan’s strength in the fields of science and technology in global
computer and communication manufacturing industries constitutes
a powerful reason why Taiwan is so important, and why cross-straits
relations have become a focal point for the world.
In terms of living standards, the popularization rate of family
networks in Taiwan is sixty-nine percent, and the number of host
computers in Taiwan connecting with the Internet ranks third in
the world. In a report called “Electronic Business and Development
in 2003,” published by the UNCTAD, it was said that Taiwan’s popularization
extent had exceeded the level of the developed countries. Furthermore
due to the high level of electronic investment, Taipei, the capital
of Taiwan, was assessed in 2004 by the Intelligent Community Forum
(ICF) under the World Teleport Association (WTA) as the fourth biggest
intelligent city along with the major cities in the UK, U.S., Australia,
and Japan.
By 2004, owing to the successful implementation of the “Digital
Taiwan Plan” by the government, Taiwan’s Gini coefficient was 0.259,
far lower than the global average of 0.6 cited in “Global Digital
Gap” of the United Nations, indicating that the digital gap in Taiwan
was lower than the international average value. Furthermore, according
to the report, “Global Communication Science and Technology in 2004-2005,”
published by the World Economic Forum, Taiwan’s network reliance
index (NRI) ranks fourteenth in the world. And in the report, “Digital
Opportunity Index (DOI) In Globe,” published by the International
Telecommunication Union (ITU) in 2005, Taiwan’s DOI ranks seventh
in the world. All these items show the popularization and convenience
of Taiwan’s electronic environment.
At present, one of the main strategic focal points of Taiwan’s
economic policy is to drive private investment and to stimulate
the innovative vigor of Taiwan’s industry. Moreover, Taiwan has
formulated a “National Development Plan in 2008” including “The
Innovation Oriented Industry Policy,” the aim of which is to enable
Taiwan to become the Asia-Pacific’s center of research and development
in industry innovation.
Taiwan will concentrate her resources in the development of knowledge-intensive
industries, such as the system single wafer, nanotechnology, photoelectric
communication, and biotechnology. By way of the “Two-Trillion, Twin-Star
Project,” Taiwan’s industry development priority is placed on the
semiconductor and video display industries in which she possesses
a competitive advantage, as well as on future star industries such
as digital content and biological science and technology industries.
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