The government may be able to raise the minimum monthly wage as soon as the second quarter of next year, private think tank Yuanta-Polaris Research Institute (元大寶華綜合經濟研究院) said yesterday, citing its latest forecast for the nation’s economic growth.
The Taipei-based institute’s latest forecast showed Taiwan’s economy may grow 3.59 percent in the fourth quarter and 3.95 percent in the first quarter next year.
In this case, the scenario may meet the conditions set by the Cabinet on Wednesday, upon which the government will be able to hike the minimum monthly wage to NT$19,047 officially after March.
On Wednesday, the Cabinet turned down an original proposal set by the Council of Labor Affairs to increase the monthly minimum wage for next year, saying the move could only take effect if GDP grows by more than 3 percent for two quarters in a row or the unemployment rate drops below 4 percent for two consecutive months.
Yuanta-Polaris yesterday forecast Taiwan’s GDP would expand at 3.85 percent next year from this year. The economy is estimated to grow at an annual rate of 4.07 percent in the second quarter, followed by 4 percent in the third and 3.4 percent in the fourth, it said.
“However, the recovering strength may remain weak next year, as most of the economic growth is due to the low base-effect [this year],” Yuanta-Polaris president Liang Kuo-yuan (梁國源) told a press conference.
The institute also revised downward its GDP growth forecast for this year by almost half to 1.38 percent, from the 2.5 percent it estimated in June, citing the worse-than-expected economic figures between July and last month.
The economy is predicted to grow 1.54 percent this quarter, compared with a 0.18 percent contraction in the second quarter, it said.
The think tank’s latest forecast for GDP growth this year was the worst among major domestic think tanks, and was also lower than the 1.66 percent growth estimated by the Directorate-General of Budget, Accounting and Statistics last month.
Liang said the exports sector is facing a “bullwhip effect,” as most of the major electronic companies in Taiwan belong to contract makers, whose business can be more volatile than brand players.
Employees’ stagnant salaries were another uncertain factor, which may drag down consumer confidence and private consumption, he added.
Asked about the impact of the US Federal Reserve’s latest round of quantitative easing, Liang said it could possibly have a long-term positive impact on the global economy, but its effect might take some time to materialize.
On the consumer price front, Yuanta-Polaris expected the nation’s headline inflation to rise 1.98 percent this year, with the trend in rising prices for non-durable goods impacting the public’s consumer confidence.
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