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|Monday, November 13, 2000, updated at 15:49(GMT+8)|
The Economist: Financial Crisis May Occur in Taiwan Early Next YearThe latest edition of British Economist predicted that a financial crisis is likely to occur in Taiwan next January in around the lunar New Year or afterwards at the earliest.
The Economist pointed out that Taiwan' stock market has slumped by 35 percent since Chen Shui-bian was elected "president" of Taiwan in last March. Many a real-estate businesses, which had already begun to devaluate since 1995, have dropped by over 50 percent, and many consortia are confronting with predicaments in paying off debts, while many loans are vouched by way of stocks and real estates. If the debtors do not have the ability to pay off the debts, the mortgage will accordingly lose their value.
According to the estimation of Taiwan authority, the current bad-debt of banks has increased to a record high of five percent, and some analysts say that the actual bad-debt is much higher than as estimated.
The Economist said that it is the Taiwan's politics that has incurred the situation as seen today. It also criticized that Taiwan's support to some banks in financial troubles will finally affect the operation of the banks still in healthy condition, and this finds some similarity in that of Japan when it used it to solve its financial problems then. The Economist held that the New Year is fast approaching, Taiwan may face a financial crisis if money shortage occurs.
Though Taiwan has some problems in its financial market, the economy still remains fairly sound, said policy-makers of Taiwan banks and there won't be any financial crisis as predicted by the Economist. Local experts say why The Economist held that Taiwan would have financial crisis is mainly judging the problem from the stock market, real estate and bad-debt of the banks. But if taking the economy in Taiwan as a whole it is still quite healthy. It shows a robust export in foreign trade, a stable exchange rate of new Taiwan currency and a bulky foreign exchange reserve. It is not as pessimistic as what The Economist has predicted.
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