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The Fed signals slower pace of rate cuts, awaits post-election policy shifts
ICT and traditional industries show recovery, but firms cautious on global uncertainties |
The global economy continues to demonstrate moderate growth. While U.S. manufacturing shows signs of improvement, it remains in contractionary territory. In contrast, manufacturing activities in China and ASEAN regions have shown broad-based recovery. However, uncertainties surrounding U.S.-China trade policies continue to pose significant risks to global economic prospects.
On the domestic front, the Composite Indicators registered an upturn in November, primarily driven by improved business sentiment among manufacturers regarding the current economic outlook. While the ICT sector maintains robust production momentum, traditional manufacturing and export performance have also shown improvement. However, with the impending Trump administration transition, heightened global political and economic uncertainties have led to a slight deterioration in manufacturers' next six-month outlook compared to previous surveys.
The service industry benefited significantly from the Double 11 shopping festival, department store anniversary sales, and major sporting events, which substantially boosted retail and food service demand. Furthermore, the New Taiwan Dollar's depreciation against the USD in November, coupled with growing insurance demand, contributed to steady premium income growth, fostering positive business sentiment in both retail and insurance sectors.The construction sector's index continued its upward trajectory in November. Civil engineering benefited from the smooth implementation of government infrastructure projects and the year-end construction surge. With the 2025 public construction budget exceeding 2024 levels, coupled with increasing demand from high-tech facility construction and green engineering projects, the sector maintains a positive outlook. In real estate, while the six major cities recorded a 0.9% monthly increase in property transactions, driven by new housing deliveries and moderate price adjustments from sellers, stringent mortgage review policies from the Central Bank, Financial Supervisory Commission, and commercial banks suggest transaction volumes will remain at subdued levels. ...Read more |
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| Low Wages Should Not Compromise Market Efficiency Principles |
| While addressing low wages is a critical concern, current discussions often oversimplify the issue by focusing excessively on income disparities and potential wage interventions. Critically, low wages do not necessarily equate to low income, and these are fundamentally different challenges requiring distinct approaches. Market-determined wages are essential for economic efficiency, and governments should prioritize fundamental strategies like improving industrial structures and productivity to naturally enhance workers' earnings. Issues of low income and income inequality are social welfare challenges that can be addressed through comprehensive welfare and relief policies. A significant possibility for employees earning less than their productive value is market imperfection or failure. Workers with extremely low wages often lack effective protest mechanisms, as their collective action could incur high social costs or become logistically overwhelming. Thus, governments typically establish minimum wage regulations to ensure basic employee protection. The minimum wage represents the sole acceptable form of wage intervention. The most effective path involves developing relevant industries, substantially reducing reliance on low-wage foreign labor, and strategically planning sector growth to truly increase workers' productive value. Indiscriminate subsidies or special privileges can significantly distort market mechanisms, potentially creating more systemic economic harm than good. Productivity enhancement requires careful, nuanced planning. While technological solutions like automation, robotics, and AI can improve efficiency, they simultaneously risk reducing labor demand and potentially increasing unemployment. Therefore, policymakers must approach such strategies with analytical rigor and critical thinking, not merely political correctness or superficial solutions. (For more, please see the current monthly journal) |
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Taiwan Economic Research Monthly
Analysis of International Trade and Industrial Policy Landscape after the US Election |
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This special topic focuses on the current global economic transformation and challenges, particularly the new US leadership's economic and political strategic adjustments, and their impact on international trade, supply chains, green transformation, and global labor regulations. The feature articles first review the continuity and changes in the US's economic and political strategies, viewing the US-China trade and technology conflicts as key turning points. They explore how disputes between the two countries have driven the resilience and restructuring of global supply chains, and their impact on the worldwide supply chain's structure and evolution. The US CHIPS and Science Act has not only influenced US industrial development but has also profoundly affected the industrial landscape in the Asia-Pacific region. Through a comprehensive analysis of chip development strategies across the United States, China, Taiwan, Japan, and South Korea, the articles examine how these nations strategically position themselves to gain competitive advantages and explore collaborative opportunities within high-tech industrial sectors. Additionally, they explore potential future cooperation areas between Taiwan and the United States, including high-tech, manufacturing, and green energy, which could become important starting points for innovation and development between businesses in both countries. Furthermore, the feature articles delve into the development of "due diligence" regulations, particularly in the international regulatory environment led by EU countries. They discuss how businesses can respond to increasingly stringent regulations, maintain compliance, and promote sustainable development.
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