, Taiwan

Check out Taiwan's economy-boosting measures

Its 3 major measures target growth in tourism, financial services and green energy.

According to DBS, the government yesterday announced a stimulus package aimed to boost the economy. The major measures include 1) nurturing the new growth sectors such as tourism, financial services and green energy; 2) expanding exports through exploring the emerging markets and promoting the free trade negotiations; 3) improving the investment environment to boost private investment and FDI.

Here's more from DBS:

All these measures focus on the long-term objectives such as diversifying export markets and diversifying industrial structure, promoting productivity growth and enhancing competitiveness. In the short term, the economy will remain vulnerable to the downside risks in the major markets including Europe, US and China.

The vulnerability to a slowdown in the global electronics sector remains high. Meanwhile, as the near term outlook for demand and earnings is lacklustre, both domestic and foreign businesses would remain cautious about increasing investment spending.

It is clear that the government is reluctant to directly increase spending on public investment and/or social welfare. The central government’s debt to GDP ratio has been rising persistently since 2008, and is projected to reach 36% this year and 37% next year, which will approach the legal limit of 40%.

Without an amendment of the public debt law to raise the debt ceiling, the space of fiscal expansion will be constrained.

We don’t expect substantial fiscal stimulus measures to boost the short-term economic growth. Meanwhile, monetary stimulus also seems unlikely.

With inflation staying far above the long term average at 2-3% in the recent two months, the central bank is most likely to hold rates steady at the upcoming policy review next week.

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