If you ask me, i would say i don’t know, but there are some food for rosier thoughts about the issue.
The Economist mag seems to think that Taiwan is pretty safe, considering Taiwan’s current account surplus of 4% of GDP, low short-term loan as % of foreign reserve and low banks’ loan : deposit ratio.
Two of thee of Taiwan biggest export destinations has huge stimulous spending by their government, namely United States (5.5% of GDP) and China (6.9% of GDP). hopefully this will have some spill-over stimulous effect on Taiwan’s economy.
United States and Japan – the other top buyer of Taiwan made goods – both have a strengthening currency. this may cushion the shock of reduced demand by increasing price competitiveness of Taiwan made goods.
these news is properly not enough to get you less depressed about the economy when are they are also news like this around.
Taiwan’s Economy Probably Posted Record Contraction and this from the economist a few weeks ago – [Taiwan] The ugliest economy of them all?
What should Taiwan’s government do?
Ming-sen dont think working on freer trade with China will mean much. and I have always thought that the government should work on freer trading relationship with other economic zones instead of focusing on China. for example, the US, Japan, Europe and other big emerging economics. China is already Taiwan’s biggest export destination, there is really no need to put more eggs in the Chinese basket.
There is really nothing Taiwanese government can do, considering that this is really a global crisis, Taiwans tiny economy really cant have much of an effect. Taiwan’s government should just make sure there is a social safety net for people who lost their job due to falling global demand. and continue to work the usually government reforms, better education, freer immigration laws, and disband the conscription military.