The central bank said it expects Taiwan's gross domestic product (GDP) to grow 4.03 percent in 2022, following the conclusion of a quarterly policy-making meeting on Thursday.
The latest GDP growth forecast for 2022 represents an upgrade from the previous estimate of 3.45 percent made by the central bank in September.
The central bank has also raised its forecast of Taiwan's GDP growth for 2021 to 6.03 percent from an earlier estimate of 5.75 percent.
The central bank is more cautious than the Directorate General of Budget, Accounting and Statistics (DGBAS), which in late November raised its GDP growth forecast by 0.21 percentage points to 6.09 percent for 2021 and upgraded the growth forecast by 0.46 percentage points to 4.15 percent for 2022.
At the latest policy-making meeting, the central bank decided to leave key interest rates unchanged for the seventh consecutive quarter with the discount rate remaining at 1.125 percent, the lowest in the central bank's history.
As the U.S. Federal Reserve hinted it will raise interest rates three times next year while simultaneously accelerating the pace at which it downsizes asset purchases, central bank governor Yang Chin-long (???) said if necessary, Taiwan's central bank will consider starting a rate hike cycle by raising interest rates 0.25 percentage points, but any move depends on the economic situation.
The central bank expects the local consumer price index (CPI) to rise 1.97 percent in 2021, lower than the 2 percent threshold, saying despite growing consumer prices in recent months, price growth in the local market remains relatively mild compared with that in the United States and Europe.
As Taiwan has contained COVID-19, the central bank said, there has been no bottleneck in merchandise flows in the local market and no labor shortages similar to those faced by many other economies.
Looking ahead, the central bank said a hike in the minimum wage, a salary raise for civil servants, teachers and military personnel, and an increase in raw material prices could push up consumer prices next year.
However, as growth in international crude prices could moderate and mitigate the impact of consumer price growth in the domestic market, the central bank said the CPI is expected to grow 1.59 percent in 2022, moderating from 2021.
In addition, core CPI, which excludes fruit, vegetables and energy, is expected to grow 1.45 percent next year, the central bank said.
At the policy-making meeting, the central bank agreed on a fourth round of selective credit controls to rein in soaring home prices, which has sparked an outcry among the younger generation, complaining they cannot afford to buy homes.
The central bank said those who have mortgages for up to two homes and buy a luxury home will be allowed to borrow up to 40 percent of the value of the newly acquired home, effective from Friday, down from the previous 55 percent.
Luxury homes refers to residential property valued at NT$70 million (US$2.52 million) in Taipei City, NT$60 million in New Taipei City and NT$40 million in other cities and counties in Taiwan.
Those who buy a third home will be allowed to borrow up to 40 percent of the home value, down from the current 55 percent, while those who buy a fourth home will see their mortgages capped at 40 percent of home value from the current 50 percent, the central bank said.
The central bank said those buying land to build homes will be allowed to borrow up to 50 percent of the land value, down from the current 60 percent, and banks will keep 10 percent of loans until construction starts.
In addition, those who buy existing homes directly from property developers will be allowed to borrow up to 40 percent of the value of the home, down from the current 50 percent, the central bank said.
The central bank added that those who pledge idle land in industrial parks as collateral will be allowed to borrow up to 40 percent of the land value, down from the current 50 percent.
After the previous three rounds of selective credit controls for the property market, Yang said at a Legislative Yuan hearing in late November that the average home loan to house price ratio extended to organizations had been lowered from 64 percent to 39 percent.
Source: Focus Taiwan News Channel