As the Ukrainian tensions are escalating, President Tsai Ing-wen said response plans have been made to maintain Taiwan's domestic supplies, prices, and the stability of the financial market.
The situation in Ukraine caused the S&P 500 to fall by 1.01 percent, the Nasdaq by 1.23 percent, and the Dow Jones Industrial Average by 1.42 percent. Russia is the world's third-largest oil producer, and the Brent crude oil price approached US$100. President Tsai Ing-wen listened to a briefing from a "Ukraine situation response group" and ordered ministries to prepare response plans to maintain Taiwan's domestic supplies, prices, and financial market stability.
Kung Ming-hsin, National Development Minister: “The government began making plans before the Lunar New Year. If there is an impact on the stock market in the short term, relevant ministries have already prepared some methods and countermeasures. ”
The Ministry of Economic Affairs is prepared to launch the oil price stabilization mechanism if the oil price rises to NT$32.5 per liter.
Wang Mei-hua, Economic Affairs Minister: “If the oil price reaches NT$32.5, then our CPC Corporation will absorb half of the increase.”
Analysts say a Russia-Ukraine war will directly affect natural gas and crude oil prices. However, if the oil price rises, then the US may produce shale oil. Middle Eastern oil producers that cut their output because of the pandemic may increase their output, allowing the price to stabilize. The impact on prices and inflation will be limited unless the war drags on.
Chen Been-lon, Research Fellow, Inst. of Economics, Academia Sinica: “It should be okay. I think it will mainly affect energy and rare materials. That region is not a global economic center and so the impact won't be big.”
Scholars said the situation may still change, so the biggest variable in US stock exchanges is the US Federal Reserve raising interest rates. If a war breaks out, the scope and frequency of interest rate hikes may be reduced, resulting in an offsetting effect that will only have an impact in the short term. For Taiwan, that means the most important task is maintaining reserves of goods to ensure that people's daily lives won't be affected. Related countermeasures can be taken depending on how the situation evolves.