The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth for this year from 5.16 percent to 5.84 percent on stronger exports, and urged policymakers to heed inflationary pressures spurred by a global economic recovery and loose monetary policies.
The plea came after the government announced a minimum wage hike of 5 percent from next year, and retailers and restaurants increased prices to reflect soaring oil, raw material and labor costs.
The latest growth projection is the highest in 11 years as Taiwan has been benefiting from a surge in demand for electronics amid trends toward remote working and distance learning amid COVID-19 restrictions.
Photo: CNA
The Taipei-based think tank said that the consumer price index (CPI) would rise to 1.84 percent this year, reversing a 0.24 percent contraction last year, when border controls were installed, halting almost all non-resident arrivals.
That would suggest a gain of 2.08 percentage points, higher than the central bank’s 2 percent alarm for monetary tightening.
“Policymakers should pay attention to inflation,” CIER president Chang Chuang-chang (張傳章) said. “While the issue is not yet serious, it is a focus of conversation.”
Many have complained about feeling the pinch and voiced concern that the situation might get out of control, Chang said.
An ongoing global economic recovery has pushed international oil and raw material prices higher, while supply deficiencies are also fueling the problem, the CIER said.
Concern over inflation might translate into reality, so the government had better be prepared, Chang said.
Cathay United Bank (國泰世華銀行) lead economist Lin Chi-chao (林啟超) said that climate change is adding to inflation worries.
This winter might be harsh, bolstering demand for coal and natural gas, Lin said.
That is why China has introduced power rationing to cope with energy shortages, Lin said, adding that snow fell in Japan’s Hokkaido Prefecture on Sunday, 17 days earlier than last year.
International fuel and commodity price hikes have played a big part in Taiwan’s CPI expansion, so the government must not take the situation lightly, he said.
Lin Chang-ching (林常青), who teaches economics at National Cheng Kung University, said that inflation in Taiwan does not look like it will be a short-term phenomenon, possibly persisting through the third quarter of next year.
Housing prices, although not a component of CPI, have picked up drastically in Tainan and would fan inflation expectations, he said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US