The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday revised upward its GDP growth forecast for this year to 3.46 percent, citing continued gains in private consumption and investment.
In July, the institute projected that GDP would expand by 3.15 percent this year from last year.
CIER predicted that GDP would grow 3.53 percent next year, as the nation’s economy is gaining steam.
However, there are several uncertainties ahead, including the issue of stagnant wages, which might pose risks to the economy in the long term, the institute said.
The institute’s Center for Economic Forecasting director Liu Meng-chun (劉孟俊) told a press conference that wage levels have stalled for more than 20 years and the reason was not a lack of economic growth, but because of disproportional income distribution.
While inflation is benign, “salary increases in the private sector are considerably small,” Liu said, adding that the wage issue would impact private consumption and domestic demand.
On Monday, the legislature’s Economics Committee passed a preliminary review of a proposed amendment to the Act for Development of Small and Medium-Sized Enterprises (中小企業發展條例草案) that would grant favorable tax treatment to enterprises that raise employees’ salaries.
The amendment has been forwarded to a cross-caucus meeting for further review.
Apart from the wage issue, global uncertainties remain risks for the economy, CIER president Wu Chung-shu (吳中書) said.
The scheduled end to quantitative easing by the US Federal Reserve, weak growth in eurozone countries and Japan’s continued easing of austerity measures could cause volatile capital flows and currency fluctuations, Wu said.
Meanwhile, China’s slowing economy and its policy of nurturing Chinese industries and supply chain companies would be a continued threat to Taiwanese suppliers of semiconductors and electronics components, Liu said.
SinoPac Financial Holding Co (永豐金控) chief economist Jack Huang (黃蔭基), who also attended the press conference, said that further Ebola outbreaks could be a risk to the global economy, as the death rate is five times higher than it was for SARS.
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