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.
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.
JPMorgan Chase & Co chief executive officer Jamie Dimon on Tuesday quipped that his company is likely to outlast the Chinese Communist Party (CCP), while reiterating the bank’s commitment to the country in wide-ranging comments that also touched on Taiwan, free speech and former US president Donald Trump. “We hope to be there [in China] for a long time,” Dimon told a panel discussion at the Boston College Chief Executives Club. Relaying a “joke” he made during a recent visit to Hong Kong, he said “The communist party is celebrating its 100th year. So is JPMorgan. And I’ll make you a
The Kaohsiung City Government yesterday said it would impose a property hoarding tax as it is seeking to contain speculation in the real-estate market, calling recent price increases “abnormal.” The announcement came in support of the Ministry of Finance’s call for local governments to levy a high tax rate on people with more than one property. Ministry officials on Tuesday discussed strategies to rein in speculation with the nation’s six special municipalities, as well as the Hsinchu city and county governments. About 84,000 out of 1.06 million housing units in Kaohsiung are not residential property, the city government said in a
PharmaEssentia Corp (藥華醫藥) shares have jumped 80.56 percent since the company obtained a US polycythemia vera (PV) drug license for its new interferon drug Besremi (ropeginterferon alfa-2b-njft) on Nov. 12. Shares on Friday closed at NT$195 in Taipei trading, up from the stock’s closing price of NT$108 on Nov. 12. PV is a rare, chronic and life-threatening blood cancer linked to a stem cell mutation in the bone marrow that results in an overproduction of blood cells and places sufferers at risk of having a blood clot, stroke or heart attack. PharmaEssentia is preparing to make Besremi available in the US in the
BOOST EXPECTED: Higher market prices would offset effects of the industry’s transition to more climate-friendly production methods, a company official said China Steel Corp (CSC, 中鋼) expects steel demand to increase on the back of governments around the world subsidizing infrastructure construction amid a stabilizing COVID-19 pandemic, CSC chairman Wong Chao-tung (翁朝棟) told an investors’ meeting yesterday. “After getting through the hard times, I foresee at least one year, very possibly two years, of strong steel market,” Wong said. Calling a dip in steel prices a “short respite for the market,” Wong said that it would likely bounce back early next year on the back of mild winter temperatures around the world allowing construction activity. Despite COVID-19 spikes in some regions and increased