GREAT DIVIDE: While almost half of homes are feeling the growth, much of that is from investment gains rather than wages, and many more are feeling worse off
By Crystal Hsu / Staff reporter
Almost half of Taiwan’s households have felt the benefits of this year’s strong economic growth, but investment gains rather than higher wages have been the main source of financial improvement, highlighting the uneven distribution of the boom, a survey by Cathay Financial Holding Co (國泰金控) showed yesterday.
Taiwan’s economy is forecast to grow 11.05 percent this year, the fastest pace in decades, but the survey suggests that strong headline growth has yet to translate into broad-based financial gains for households.
Cathay’s survey found that 49 percent of respondents had benefited financially from economic growth, while almost half said they had seen little improvement or that their financial situation had deteriorated.
People crowd the cosmetics counters at the Nanxi branch of the Shin Kong Mitsukoshi Department Store in Taipei on Oct. 1.
Photo: CNA
Among those reporting financial benefits, investment returns from stocks, mutual funds and other financial assets were the leading source of gains, cited by 42 percent of respondents. Only 10 percent pointed to higher salaries, bonuses or better employment opportunities, while another 37 percent said their income had not increased significantly.
The findings suggest that rising asset values have played a greater role than employment income in shaping how households experience Taiwan’s economic expansion.
Consumer sentiment has strengthened alongside the boom. Cathay’s index of optimism about economic conditions and its outlook index rose, while its wage expectations index reached a record high, suggesting that households are becoming more confident about income prospects.
Improved sentiment lifted spending intentions, although willingness to buy durable goods, including housing, weakened, indicating that optimism has yet to translate into stronger demand across all major spending categories.
The National Development Council’s business climate monitor showed that Taiwan remained in the booming range for a ninth consecutive month in August, with leading and coincident indicators continuing to rise.
Cathay’s respondents expected the economy to expand by an average of 10.94 percent this year, broadly in line with the government’s forecast. However, their inflation expectations remained elevated, with respondents anticipating consumer price increases of 2.52 percent, compared with the Directorate-General of Budget, Accounting and Statistics’ forecast of 2.07 percent.
Stock market sentiment improved. Cathay attributed the change to reduced policy uncertainty following the US Federal Reserve’s rate decision last month and renewed enthusiasm for artificial intelligence applications.