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Updated Friday, May 22, 2009 3:05 pm TWN, By Rachel Chan, CNA

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Worst is over for economic downturn: vice premier

TAIPEI, Taiwan -- The worst of the global economic downturn impact on Taiwan's economy is over and the government is "cautiously optimistic" about the country's short-term economic prospects, Vice Premier Chiu Cheng-hsiung said Friday.

"Judging from a season-to-season basis, we can see that the second season is better than the first and that the third will be better than the second. Therefore, the first season is the bottom and the worst scenario is already over, " Chiu said at a forum titled "2009 Asia Political and Economic Prospects" hosted by the Taiwan Institute of Economic Research, a local think tank.

Chiu's remarks came in the wake of the announcement a day earlier by the Directorate General of Budget, Accounting and Statistics (DGBAS) that Taiwan's economic growth in the first quarter of this year declined 10.24 percent from the same period of 2008, marking the worst single-quarter slump since 1961 when the government began compiling quarterly per capita income.

Despite the poor Q1 performance, the DGBAS said, there are scattered signs that the decline is starting to slow, and it forecast that the fall will shrink to 8.5 percent in the second quarter and further narrow to 2.98 percent in Q3.

For the last quarter of this year, it has forecast positive growth of 5.2 percent, with all performances, including export trade, expected to be back to normal.

Chiu noted that despite the "cautious optimism, " there are still many challenges lying ahead that will require cooperation between the government and private sectors.

"Taiwan's industrial development needs to rely not only on exports but also on emerging industries, which is in line with the government's development strategies that will facilitate innovation in six key emerging industries," the vice premier stated.

"In addition to Japan and the U.S., Asian economies -- including Taiwan -- should also work with rising economies such as China and India. Only through diversifying markets and products can Taiwan have sustainable economic development at a steady pace," he added.

Economic Affairs Vice Minister John Chen-chung Deng also expressed similar views at the forum, saying that increasing competitiveness is the key to Taiwan's industrial development, as it is impossible for the country to significantly reduce its dependence on exports.

To cope with the drastic changes taking place in the global economy and enhance Taiwan's industrial development, the Executive Yuan is mapping out concrete strategies aimed at expanding market scale, increasing production value and stimulating development opportunities in six emerging industries that include tourism, medicine and health care, biotechnology, green energy, culture and creativity and high-end agriculture.

The project will include product diversification, product branding and the acquisition of key technology, and will carry out the planned input of government resources to help upgrade industrial competitiveness and assist these industries in breaking through the difficulties facing the export industry.

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