Country Report Taiwan January 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).
The judiciary's independence has been questioned owing to a decision to change the judge dealing with the trial of the previous president, Chen Shui-bian. This will raise tensions between the KMT and opposition parties.
Limited financing options and concerns over rising unemployment will undermine consumer spending. Fiscal stimulus measures announced in 2008 will fail to offset the impact of these factors on consumption.
The Central Bank of China (CBC, Taiwans central bank) made another emergency cut in its key policy interest rates in January. Further such cuts are possible if the global economy or local financial markets deteriorate further.
The Economist Intelligence Unit has revised down its forecast for global economic growth in 2009. As a result, we now expect Taiwan's economy to contract by 3.5% (previously 2.9%) this year.

The main opposition Democratic Progressive Party (DPP) has in recent weeks been increasingly successful in raising doubts about the independence of Taiwans judiciary and its handling of the corruption case against Mr Chen.
In its efforts to discredit the government, the DPP has succeeded in tying together Mr Chens detention and a student movement that arose in the wake of a clash between police and protesters in June 2008.
The continuing rapprochement between Taiwan and China has caused unease in Japan: Japan's government views Chinas increasing regional influence with some trepidation.
Dismal merchandise export figures for December prompted the CBC to make an emergency 50-basis-point cut in its key policy interest rates in early January.
In November 507,700 people were registered unemployed, representing a rise of 4.6% month on monththe highest single-month percentage increase ever recorded in Taiwan. Inflationary pressures have continued to ease, however.
A survey of the business climate has highlighted considerable pessimism among businesses in manufacturing and the services sectors with regard to the outlook for the next six months.
Taiwans merchandise exports plunged by 42% year on year to, US$13.6bn, in December, the sharpest year-on-year fall ever recorded.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22