Asian Crisis Project Country Report on Taiwan

Since the first eruption of the Asian crisis last July, the majority of Southeast Asian countries have been hit by stormy shocks from the regional crisis to their financial sectors; they also have encountered grave setbacks in production, consumption and investment. As a result, their economic growth has been stunted and possibly reversed. However, among Asian countries, Taiwan appears to be away from such economic chaos. Taiwan does not suffer serious structural problems that seem to have impacted the other Asian Tigers. The fact that Taiwan’s economy has incurred a loss of international investor confidence is simply due to Taiwan being located in the region. Taiwan's ability to weather the Asian financial crisis so far can be seen as an assertion of the soundness of its economic policies. Most important, the small fluctuation of the exchange rate and stock market, a higher saving rate, a surplus of account balance, higher foreign reserves, and no substantial external debts also contribute to the stability of Taiwan's economy. 1 Email address: [email protected]. The author would like to thank Professor Kar-Yiu Wong, Professor Levis Kochin, Shiuan-Tung Peng and Chiun-Fang Chiou for their useful suggestions during the progress of the report, and to Kevin Spradlin, Jr. for thoughtful proofreading.