Taiwan in 1991: Searching for Political Consensus

Economic Recovery Taiwan's economy had developed a recessionary trend during the second half of 1990. The real GNP growth rate was down to 5.29% from 7.18% in 1989, inflation kept almost steady at 4.13%, and the unemployment rate rose to 2% from 1.7% in 1989. Moreover, increasing labor costs, a veritable wave of social unrest, and a surging criminality resulted in a strong outflow of domestic capital.' Taiwanese investment abroad, which had been a meager US$7 million in 1986, reached $1.55 billion in 1990 and continued to grow with $750 million already recorded in the first quarter of 1991.2 Yet, the sluggish economic performance started to improve slowly but steadily throughout the year. The major boost for the economy initially came from foreign trade. Until the end of October 1991, $70.44 billion in exports and $57.94 billion in imports had already exceeded the figures for the whole of 1990.3 But since May, domestic consumption had also picked up, and all of this resulted in accelerated growth so that the overall real GNP growth rate is forecast to reach 7.12%. This would mean that the ROC economy had