Sunday, June 18, 2006

TAIWAN LEADS S. KOREA IN GDP BY PURCHASING POWER: CEPD

Taipei, June 18 by Deborah Kuo, CNA

Taiwan's per capita gross domestic product (GDP) surpassed South Korea's by over US$6,000 in 2003 based on purchasing power parity (PPP) adjustments, Taiwan's top economic planner said Sunday.

Hu Sheng-cheng, chairman of the Council for Economic Planning and Development (CEPD) , said Taiwan's PPP-adjusted per capita GDP for 2003 was US$24,558, surpassing South Korea's US$17,900, indicating that Taiwanese people enjoyed a higher living standard than South Koreans.

Noting that major international economic institutions use PPP to measure a country's per capita GDP, Hu said the measure, which excludes inflation and currency fluctuation rates, more accurately gauges a country's per capita national income and general living standards.

Quoting statistics compiled by the Swiss International Institute of Management and Development, Hu said Taiwan's PPP-adjusted per capita GDP reached US$24,676 in 2004, ahead of South Korea's US$18,686.

Due to the "time lag" in compiling PPP-adjusted measures, no data is available to make a comparison for the year 2005, he said.

Hu acknowledged that South Korea is a respectable competitor judging from its robust economic development and brilliant trade performance. However, he said he disagrees with those academics who complain that Taiwan has lagged behind South Korea in economic growth in the last two years.

Chu Yun-peng, head of the National Central University's Taiwan Economic Development Research Center, said recently that "South Korea has emerged as the second largest source of Taiwan's trade deficit after Japan. I'm not surprised by its overtaking Taiwan in terms of per capita GDP in 2005. With South Korea's towering ambition, I think that country is likely to surpass Taiwan even in terms of PPP-adjusted per capita GDP in the near future."

Chu also said that Taiwan's government should not become complacent by accepting moderate growth and should map out a forward-looking economic development policy to accelerate growth.

According to recent statistics issued by the Bank of Korea, South Korea's economic growth rate was estimated at 4 percent for 2005, slightly lower than the 4.7 percent registered in 2004. Nevertheless, its per capita GDP reached US$16,291, marking an impressive 14.8 percent year-on-year increase.

Meanwhile, Taiwan's per capita GDP amounted to US$15,271 for 2005, up 7 percent from the previous year's level. By comparison, Taiwan went from leading South Korea by US$100 in per capita GDP in 2004 to trailing it by US$1,020 in 2005.

Hu attributed this mainly to the greater appreciation of the Korean won against the U.S. dollar, which rose 11.8 percent against the greenback while the new Taiwan dollar only rose 3.9 percent during the same period.

Hu said currency exchange rate changes have nothing to do with a country's competitiveness and only reflect international capital movements during a specific period. Therefore, he said, it might be too early to conclude that Taiwan has fallen behind South Korea. "It is unfair to say that the government has failed in efforts to rev up Taiwan's economy simply because one set of figures show South Korea surpassing Taiwan in per capita GDP for one single year, " Hu argued.

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