February 21, 1998 in Nation/World

Taiwan Withstands Fallout From Crisis Robust Growth, Stock Market Surging Can This Be Asia?

Associated Press
 

The stock market is up 11 percent this month alone.

Last year’s growth rate was the highest in six years. Sound too good for an Asian economy?

It’s not - have a look at Taiwan, a healthy standout in a region full of financial sickness.

Economists predict growth will slow this year because of the trouble facing other Asian economies, but say that the island nation of 21 million people remains one of Asia’s bright spots.

Economic growth last year was 6.8 percent, spurred by a surge in manufacturing, a government report said. For much of the year - until economic troubles really started biting across Asia - the increase in exports over 1996 was more than 10 percent.

Taiwan escaped largely unscathed partly because of its careful banking practices.

Its bulky foreign reserves and ceilings imposed on foreign equity investment also gave the government ammunition to battle speculators targeting its financial markets.

Taiwan has tried to use its economic clout to make friends in the region, hoping its battered Asian neighbors will now be more willing to defy China and accept its offers of aid.

There could be a temporary pause in that policy after Taiwan’s top banker, Sheu Yuan-dong, died in a plane crash Monday while returning from a meeting in Bali, Indonesia, with other Asian finance officials.

But analysts say Taiwan won’t change the policy, which is part of a zealous campaign to help the island break the diplomatic isolation imposed by Taipei’s rival government in Beijing.

Taiwan’s government forecasts a more moderate 6.2 percent growth rate this year because the economies of Taiwan’s major trading partners - the United States, Japan and China - are expected to be dragged down somewhat by the Asian woes, said Wei Duan, head of the Directorate General of Budget, Accounting and Statistics.

Economists said the government forecast for 1998 is probably too optimistic. Their own estimates are that Taiwan’s growth will be between 4 to 5.8 percent. Still, that would be the secondhighest in Asia, after China.

The economies of Indonesia, Thailand and South Korea - the three countries currently receiving life support from the International Monetary Fund - are all expected to shrink this year.

But P.K. Basu, a regional economist with Union Bank of Switzerland in Singapore, told the Dow Jones news service on Wednesday that leading Taiwan indicators point to continued strength through the first quarter of this year, moderating as the year unfolds.

Taiwan’s stock market has risen 11 percent this month, mostly on the strength of the technology sector, after falling 13 percent in the second half of last year.

The Taiwan dollar also has stabilized after falling nearly 20 percent against the U.S. dollar since last July when the regional turmoil began.

Although Taiwan’s exports are expected to slow, economists still see Taiwan outperforming most economies in the region this year.

Taiwan’s perceived status as a “safe haven in Asia is completely justified,” said Daniel Lian of ANZ Investment Bank in Singapore.

© Copyright 1998 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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