Country Report Taiwan February 2009

Summary

The president, Ma Ying-jeou of the ruling Kuomintang (KMT), has a strong mandate to govern, as the KMT also has control of the Legislative Yuan (parliament).
In January family members of the previous president, Chen Shui-bian, admitted to money-laundering. This has undermined Mr Chen's suggestion that the corruption case against him is politically motivated.
Funding for a public works project worth NT$500bn (US$14.7bn) was approved by the government in mid-February. However, the deteriorating external outlook will significantly outweigh the positive impact of public spending.
The Economist Intelligence Unit has revised down its forecast for Taiwan's economy to a contraction of 6.5% (previously 3.5%) in 2009. This follows a downward revision to our expectations for global economic growth this year.
Weak domestic demand will ease capacity constraints in product markets, thus limiting the ability of companies to increase prices. This will be the main reason for a 1% fall in consumer prices in 2009.

The Democratic Progressive Party (DPP), which Mr Chen led during much of his time as president, has continued to suggest that the prosecution case against him is politically motivated.
Mr Ma is attempting to use the recent warming of relations with mainland China to further Taiwan's diplomatic aims internationally: he wants China to support Taiwan's bid to secure observer status at the World Health Assembly.
Concerns over rising unemployment have prompted the government to announce further fiscal measures to spur domestic demand and encourage economic growth.
Taiwan's merchandise exports plummeted by 44.1% year on year in January, to US$12.4bn. This was the sharpest percentage fall ever recorded, eclipsing the dramatic 41.9% year-on-year fall in December.
Taiwan's index of industrial production fell by 32.4% year on year in December. This was a record low and followed a 28.4% year-on-year drop in November.
Taiwan's traditional shopping spree ahead of the Lunar New Year holiday (which was in late January this year) went ahead as usual, although this time it was buoyed by the government's NT$86bn shopping voucher scheme.
The US government removed Taiwan from its "Special 301 Watch List" of intellectual property rights violators in January.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49;10
NAICS Code: 52;22;212