Taiwan, like Singapore, escaped the worst effects of the various regional crises. It also has one of the highest rates of steel consumption per head in the world. Its steel market remained strong until the second half of last year, until it was undermined directly and indirectly by the effects on the economy's most dynamic sectors of the downturn in world electronics and communications equipment markets. Local production of computers and other equipment is large enough for their requirements for casing to form a significant segment of demand for coated steel coil, and this has been reduced, but the indirect effects of excess production capacity are now having a bigger impact on steel orders.The prudent policies of its government and the cautious practices of its bands cannot countermand the effects of US markets. In fact, they could be making matters worse in the short term, as bands are reported to be reluctant to renegotiate debts of small and medium -sized companies in trouble. Gloomy export prospects have deterred new investment, commercial construction has slowed, and job losses have depressed consumer spending. The unemployment rate in May was 4.2 percent -modest enough by EU standards, let alone developing country comparisons, but a record level for Taiwan. The Taiwanese, like the Japanese, respond to uncertainty by saving harder than ever. Deposits in financial institutions in May were 5.5 percent higher than twelve months earlier.
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