These Include The Apparel, Leather & Fur, And Wood & Bamboo Products Industries.

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  • These Include The Apparel, Leather & Fur, And Wood & Bamboo Products Industries.

    1. 1. Yaw-Chung Liaw, Ph.D. Director General Overall Planning Department, Council for Economic Planning and Development Executive Yuan (Cabinet), Taiwan Taiwan’s Economic Momentum and Prospects The 14 th Annual Conference on Pacific Basin Finance, Economics, and Accounting Panel Session IX (Room 105) 15:45 p.m.- 17:00 p.m. July 14, 2006
    2. 2. <ul><li>I. TAIWAN ECONOMIC ACHIEVEMENTS AND CHALLENGES </li></ul><ul><li>II. TAIWAN CURRENT ECONOMIC DEVELOPMENT </li></ul><ul><li>III. GLOBAL ECONOMIC DEVELOPMENT TRENDS AND CHALLENGES </li></ul><ul><li>IV. TAIWAN’S FUTURE ECONOMIC DEVELOPMENT AND OUTLOOK </li></ul><ul><li>V. CONCLUSION </li></ul>CONTENTS
    3. 3. 1953 1961 1973 1984 2000 1991 First-phase Import Substitution Export Expansion Stage Second-phase Import Substitution and Export Expansion Stage Economic Liberaliz-ation Stage High-tech Industrial Develop-ment Stage Knowledge Economy Stage Light industry Light industry Basic and heavy industries Development of strategic industries Promotion of ten emerging industries Knowledge- based industries 1. Taiwan’s Industrial Development History (Course of Change in the Factor Intensity of Production) y =f (L, K, T, knowledge) L L K T Knowledge y=f(T/L) I. Taiwan Economic Achievements and Challenges
    4. 4. Over the past fifty-some years, Taiwan has achieved rapid economic growth accompanied by price stability. From 1953 to 2005, the economy grew at an average annual rate of 7.9%, with consumer prices (the CPI) rising by an average of only 4.5% per year (2.4% if the energy crisis years in the 1970s are excluded). Source: Directorate General of Budget, Accounting, and Statistics. Note: *US$82 million in 1959. 2. Taiwan’s Economic Development Experience and Achievements - 253,290 - * Foreign reserves (US$ million) 13.9 182,616 187 Imports (US$ million) 15.1 198,435 116 Exports (US$ million) - 73.6 48.1 Services output as ratio of GDP ( % ) - 24.6 19.7 Industrial output as ratio of GDP ( % ) - 1.8 32.2 Agricultural output as ratio of GDP ( % ) 8.6 15,271 196 Per capita GDP(US$) 10.6 345,862 1,675 GDP (US$ million; current prices) 1.9 22.65 8.54 Population (million persons) Annual rate of change ( % ) 2005 1952
    5. 5. Taiwan’s “World Top Producer” Items in 1983 and 2005 Sources: CEPD, MOEA ITIS Plan.  Taiwan Has Become a Global Stronghold of High-Tech Products 4.82 .18 3.5 .19 Production Volume (billion units) 11.3 5.53 2.1 .28 .49 .52 17.79 1.25 7.97 5.64 .52 Production Value (US$ billions) Foundry IC packaging IC testing Mask ROMs CD-R discs CD-RW discs DVD-R discs DVD-RW discs Glass fiber ED Cu Large-size TFT-LCDs TN/STN-LCDs IC design DRAM WLANs Products (excluding offshore production) 2005 <ul><ul><li>67 </li></ul></ul><ul><ul><li>45 </li></ul></ul><ul><ul><li>60 </li></ul></ul><ul><ul><li>91 </li></ul></ul><ul><ul><li>58 </li></ul></ul><ul><ul><li>77 </li></ul></ul><ul><ul><li>71 </li></ul></ul><ul><ul><li>59 </li></ul></ul><ul><ul><li>48 </li></ul></ul><ul><ul><li>36 </li></ul></ul><ul><ul><li>41 (#2) </li></ul></ul><ul><ul><li>20 (#2) </li></ul></ul><ul><ul><li>22 (#2) </li></ul></ul><ul><ul><li>22 (#2) </li></ul></ul><ul><ul><li>23 (#2) </li></ul></ul>1.8 .23 .22 .19 .18 .10 .08 .04 .01 .01 .01 Shoes Electric fans Bicycles Umbrellas Sewing-machines Bicycle tires Thermos flasks MSG Bicycle brakes Camphor Bicycle chains Global Market Share (%) Production Value (US$ billions) Products 1983
    6. 6. 3.Trend of Industrial Structure Source: Directorate General of Budget, Accounting, and Statistics. ◎ Industry’s Structural Trends (1) The industrial structure has undergone enormous change: In 1986, industry share of GDP rose to a historic high of 44.8%; services’ share increased year by year, to reach 73.6% in 2005. (2) Within the manufacturing sector, high-tech industries accounted for 43.1% of output in 2005. (3) Changes in the industrial structure have generated structural unemployment. In recent years, the government has adopted a raft of short-, mid- and long-term employment promotion measures, and in the future must consider industrial development directions in the light of such structural changes.
    7. 7. ⊙ Main competitive industries have large output value. As trillion-dollar industries have gradually take shape, they have also gradually developed comprehensive supply chains. 2005 Digital content (NT$ 290 billion ) Biotech (NT$15 billion ) 2-Trillion 2-Star  industries Semiconductor (NT$1.11 trillion) Textile mill products ( 476 )  Petrochemicals (NT$1.14 trillion)  Communication (579) Machinery & equipment Image display Iron & steel ( 640 ) ( 909 ) ( 955 )
    8. 8.  Under the impact of the international competition brought by globalization, some export industries have experienced relatively serious decline. These include the apparel, leather & fur, and wood & bamboo products industries. ⊙ Certain industries have fallen into severe decline, and need assistance to transform and upgrade.  Taiwan’s entry to the WTO has also delivered a serious blow to certain traditional-industry manufactures. Besides the large-volume import of low-cost towels from China, ceramics, furniture, non-woven cloth, fiber-optic cable, paper, and building materials all face competition from Asian countries.
    9. 9. Upstream industries (13.0%) (31.1%) Supportive industries (13.9%) (11.9%) Final consumption (20.9%) (13.8%) Computers and peripherals 4,558 (14.3%) 2,662 ( 4.4%) Communications industry 828 (2.6%) 3,764 (6.2%) Machinery and parts 1,730 (5.4%) 2,873 (4.7%) Passive components industry 1,188 (3.7%) 1,821 (3.0%) Flat panel display industry 290 (0.9%) 4,759 (7.8%) Plastics and composite fiber industry 1,200 (3.8%) 4,513 (7.4%) 1996 export value (percentage) Source: Compiled by CEPD from MOEA and MOF statistical data. Semiconductor industry 2,623 (8.3%) 9,690 (15.9%) Metal products 1,537 (4.8%) 2,551 (4.2%) Vehicles and parts 1,258 (4.0%) 1,944 (3.2%) ⊙ Internationally competitive products have already generated industrial and regional clusters, with industries developing backward from downstream to upstream and toward capital and technology intensity, while science parks have also promoted related industrial clustering. Unit: NT$100 millions 2005 export value (percentage)
    10. 10. Source: Council for Economic Planning and Development. 1. Monitoring Indicators <ul><li>The monitoring indicators flashed “green” in May 2006 for the tenth successive month. The positive movements of most indicators suggest continued steady expansion. . </li></ul>II. Taiwan Current Economic Development
    11. 11. 2. Economic Growth <ul><li>Despite the deceleration in the first half of 2005 due to a worldwide slowdown, the economy gained momentum in the second half, thanks to the boost brought to exports by the upswing in the global consumer electronics market, and steady pickup in private consumption, leading to a 4.1% growth for the whole year. </li></ul><ul><li>The economy grew 4.9% in the first quarter of 2006, with exports and manufacturing production remaining strong. </li></ul>Contribution to Economic Growth (in percentage points) Source: Directorate General of Budget, Accounting, and Statistics. 2.5 0.0 -0.2 1.8 1.6 4.1 2005 0.4 0.3 0.1 -0.4 -0.6 Others 1.3 2.3 0.6 1.5 0.4 Private Consumption Private Gross Fixed Capital Formation Domestic Demand 3.8 -0.5 1.2 4.9 2006 (Jan.-Mar.) 2.7 -0.03 0.7 3.4 2003 -0.2 3.7 6.3 6.0 2004 2.6 0.5 1.6 4.3 2002 2.5 -4.4 -4.6 -2.2 2001 Net Foreign Demand Economic Growth (yoy)
    12. 12. 3. Domestic Investment Gross Fixed Capital Formation: Growth rate <ul><li>Total investment increased at a modest rate of 0.5% in 2005, with private investment declining 1.3% while investment by government and by public enterprises expanding 0.3% and 17.2%, respectively. </li></ul><ul><li>In 2006, private investment is expected to grow more quickly while government investment will grow only marginally. Investment by public enterprises is expected to fall as a result of privatization. </li></ul>unit : % Source: Directorate General of Budget, Accounting, and Statistics. -3.8 -4.9 -3.9 -4.0 2006 (Jan.-Mar.) 0.3 17.2 -1.3 0.5 2005 -5.7 -18.2 31.0 17.5 2004 -1.1 -4.1 -0.3 -0.9 2003 -12.8 -1.3 4.1 -0.6 2002 -6.4 1.4 -26.8 -19.9 2001 Government investment Public enterprises investment Private investment Total
    13. 13. 4. Industrial Production <ul><li>Industrial production softened in the first half of 2005, but has displayed much more strength since August, increasing 3.4% for the whole year. It went up higher in the first five months of 2006, with manufacturing and construction industries increasing 8.0% and 19.3% respectively. </li></ul>Growth of Industrial Production unit : % Source: Ministry of Economic Affairs. construction Electricity, gas, and water Manufacturing Mining Total 8.0 3.2 10.6 7.4 9.4 -8.4 19.3 2.8 -6.2 7.9 2006 (Jan.-May) 11.4 3.8 -9.9 3.4 2005 4.9 3.0 -4.4 9.9 2004 8.9 3.8 -7.4 7.1 2003 -20.7 3.3 8.3 7.9 2002 -11.2 1.1 0.1 -7.8 2001
    14. 14. 5. Foreign Trade 6 <ul><li>Exports and imports softened in 2005, with two-way trade increasing to 8.5%. Exports and imports expanded by 12.9% and 9.5%, respectively, in the first six months of 2006. </li></ul><ul><li>Trade surplus grew to US$15.8 billion in 2005, from US$13.6 billion in 2004. It posted US$7.8 billion in first half of 2006, up US$3.6 billion from the same months last year. </li></ul>Source: Ministry of Finance. 7.8 9.5 98.3 12.9 106.0 11.3 204.3 2006 (Jan.-Jun.) 15.8 8.2 182.6 8.8 198.4 8.5 381.0 2005 13.6 31.8 168.8 21.1 182.4 26.1 351.2 2004 22.6 13.0 128.0 11.3 150.6 12.1 278.6 2003 22.1 4.9 113.2 7.1 135.3 6.1 248.5 2002 18.3 -23.3 108.0 -16.9 126.3 -19.9 234.3 2001 Growth Value Growth Value Growth Value   Balance Imports Exports Trade   Units: US$ billion, %
    15. 15. Employment Growth Rate Unemployment Rate % 6. Employment <ul><li>Total employment growth decelerated in 2005 and further in the first five months of 2006. </li></ul><ul><li>The unemployment rate continued to display a declining trend, dropping to 3.8% in January-May 2006, the lowest since 2001. </li></ul>(Jan.-May) Source: Directorate General of Budget, Accounting, and Statistics.
    16. 16. Source: Directorate General of Budget, Accounting, and Statistics. 7. Price <ul><li>Prices increased moderately in 2005, with consumer prices up by 2.3%. . </li></ul><ul><li>Due to higher prices of energy, mineral and basic metal products, wholesale prices in the first half of 2006 increased 4.0% from a year ago. Consumer prices rose 1.4%, with increases in fruits, oil, tobacco, and medical care offsetting a fall in garments. Core prices (excluding fresh food and energy prices) rose 0.6%. </li></ul>Core Prices
    17. 17. 8. Money and Banking <ul><li>For the first five months in 2006, M1B and M2 expanded 6.2% and 6.7%, respectively. </li></ul><ul><li>Market interest rates have seen a slightly upward trend since the second half of 2004. In May 2006, commercial paper rate and interbank rate recorded 1.50% and 1.52%, respectively. The Central Bank raised the rediscount rate four times in 2005, and further to 2. 500% in June 2006. </li></ul><ul><li>Since the broadly defined non-performing loan (NPL) ratio of domestic banks peaked at 11.27% at the end of 2001, a continuing program of financial reforms has slashed it dramatically to just 2.24% in December 2005 . </li></ul>Source: The Central Bank of China, R.O.C.
    18. 18. Already signed and set up Under consideration or negotiation Southern Cone Common Market ( MERCOSUR ) North American Free Trade Area (NAFTA) 2005 Establishment of Free Trade Area of the Americas (FTAA) EU-Mexico FTA Expanding to Latin American countries China-ASEAN FTA (2010) European Union 15 Countries (EU) 2004 Eastward Expansion to 25 Countries EU-ACP (African, Caribbean & Pacific Countries) FTAs (more than 70 countries) Japan-ASEAN Comprehensive Economic Partnership Framework Agreement (2003) Japan-South Korea FTA Japan-Singapore New Century Economic Partnership Agreement (2002) EU-ASEAN ASEAN-India ASEAN-Australia-New Zealand Closer Economic Relations (CER) Taiwan-Panama FTA (concluded) Taiwan-Nicaragua FTA (under negotiation) Taiwan-Guatemala FTA (concluded) China-HK/Macau Closer Economic Partnership Arrangements (CEPA) ASEAN Free Trade Area (AFTA) <ul><li>The Formation of Economic and Trade Networks </li></ul><ul><li>around the World </li></ul>US and Central America Free Trade Agreement ( CAFTA ) III. Global Economic Development Trends and Challenges
    19. 19. ˙World economy entering golden decade of stability and prosperity. ˙Asia’s rise serving as a new driving force for the global economy. World USA Japan EU East Asia % Economic growth rate Note: BRICs refers to Brazil, Russia, India and China; the G6 are the US, Japan, Germany, UK, France and Italy; East Asia refers to the 4 Asian Dragons, the ASEAN 4, and China. Source: Global Insight Inc. 2. The Rising Power of Emerging Economies BRICs GDP rising as ratio of G6 GDP 2003 : 13.3 %  2015 : 19.1 % 2005-2015 annual average growth rates Unit: % 3.9 4.3 5.5 6.8 2.6 Brazil Russia India China G6
    20. 20. 3. Pivotal Profit Niche of Innovational Services    In the wake of the tremendous advances in information and communications technology, and the sharp fall in communication costs, service industries will break through their traditional limitations of “inseparability”, “unstorability” and “undeliverability” to spark a new “service sector revolution.” Heavy Investment in the Service Sector by Transnational Corporations - Global FDI Flows by Industrial Sector     1989~1991 2001~2002 <ul><li>With IT industry hardware and consumer electronics having already reached a plateau, the focus will shift from hardware to software in the next stage of the information revolution, and innovational services will become the key competitive factor. </li></ul><ul><li>In recent years, the sharp expansion of investment by transnational corporations has fully reflected the opportunities of service industry development. </li></ul><ul><li>A look at FDI flows shows that in 2001~2002, 71% of global FDI went into the service sector, with telecommunications, storage and transportation showing the fastest growth, followed by business services. </li></ul>Services Services Manufacturing Manufacturing Primary industry Primary industry Source: UNCTAD
    21. 21. 4. Accelerating Trends of Population Aging and Fertility Decline Year-end 0-14 15-64 65 &+ Unit: % ◎ Future Population Structure ◎ Projected Future Birth Rate (Median Projection) 1000 persons 67.0 14.2 37.0 55.2 7.8 86 1.10 -1.4 18,627 2051 23.3 16.9 16.6 71.3 12.0 169 1.10 -0.1 23,284 2021 14.5 20.6 10.7 74.0 15.3 197 1.10 0.2 23,138 2011 13.5 26.0 9.7 71.7 18.6 205 1.12 0.3 22,690 2005 13.3 27.1 9.5 71.2 19.3 217 1.20 0.4 22,615 2004 10.5 37.1 7.1 67.8 25.1 325 1.76 0.9 20,944 1993 Elderly  /  *100 Infants  /  *100 65 &+  15-64  0-14  No. of Births (1000s) Total Fertility Rate (Ave. no. of children per woman) Annual Growth Rate (%) Total Population (1000s) Year Dependency Ratio (%) Year-end Population Structure (%) Fertility Year-end Population Item
    22. 22. Global CO2 Emissions from Fossil Energy 5. Green Energy-Saving Driving Tide 100 million tons Speeding up the development of renewable energy Implementing green production and consumption Kyoto Protocol  38 countries (excluding non-signatory US) to reduce greenhouse gas emissions by average of 5.2% below 1990 levels from 2008 to 2012. Industrialized countries’ greenhouse gas emission reduction pledges (2008~2012) Emission limits (1990=100) EU 92 Japan 94 Canada 94 0 50 100 150 200 250 300 350 400 1970 1980 1990 2001 2010 2020 Coal Natural gas Oil
    23. 23. Average Income Development Stage Resource driven Investment driven (capital) Innovation driven (knowledge) Taiwan’s current stage ◎ The Driving Forces of Taiwan’s Economic Development IV. Taiwan’s Future Economic Development and Outlook
    24. 24. - ◎ Forecasts for Taiwan’s economic growth Note: 1. DGBAS = Directorate-General of Budget, Accounting and Statistics , Taiwan, ROC.    2. CIER = Chung-Hua Institution for Economic Research, Taipei .    3. TIER = Taiwan Institute of Economic Research, Taipei .    4. IMF = International Monetary Fund. 5. EIU = Economist Intelligence Unit. Source: Websites of each forecasting institution. 3.9 3.7 March 2006 Global Insight 4.1 4.1 March 2006 World Bank 4.3 4.0 July 2006 EIU 4.5 4.5 April 2006 IMF 4.18 4.17 April 2006 CIER - 3.91 April 2006 TIER - 4.13 Jun. 2006 Academia Sinica - 4.31 May. 2006 DGBAS 2007 2006 Release Date Forecasting Institution
    25. 25. 2006~2008 4.9 % US$18,000 ( 2008 ) 4.0 %( 2008 ) 1.4 % 2006~2015 4.6 % US$27,000~30,000 ( 2015 ) 4.0 %( 2015 ) 1.2 % Targets Per capita GDP Unemployment rate Employment growth CPI increase Growth of potential GDP Economic growth New Century Manpower Plan ◎ Macroeconomic Targets 2006 4.5 % US$15,207 Less than 4.0 % 1.4 % Less than 2.0 %
    26. 26. ⊙ Sources of Potential GDP growth
    27. 27. V. Conclusion  Conference on Sustaining Taiwan’s Economic Development (COSTED) ◎ Macroeconomic Targets <ul><li>During 2006 to 2015, Taiwan’s average growth rate of GDP is estimated at 5%. </li></ul><ul><li>Per capita GDP is projected to increase to US$32,000 in 2015. </li></ul>
    28. 28. Thank you

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