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Experts call for monetary policy twist to boost investment

Reporter Jamie Lin Pinzon
Release time:2024/04/15 16:45
Last update time:2024/04/15 16:45
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TAIPEI (TVBS News) — Taiwanese nationals and corporations are increasingly opting to save more and invest less amid soaring inflation and growing environmental concerns. According to the Directorate General of Budget, Accounting and Statistics, the excess savings rate, which measures gross savings minus gross investment, is projected to hit 15.46% in 2024, amounting to NT$3.8 trillion. 

While this reflects economic resilience, a high excess savings rate indicates a surplus of idle funds, potentially stunting economic growth. Against this backdrop, experts recommend that the government address this through monetary policy adjustments.

 

"For example, lower interest rates to boost the incentive for investment. And promote consumption. So that people are willing to withdraw money from the bank to spend," said Darson Chiu, a research fellow at the Taiwan Institute of Economic Research.

Comparatively, Taiwan's excess savings rate last year outstripped that of other Asian nations, with South Korea at only 1.3%, Japan at 3.3%, and China at 1.5%. Experts attribute this disparity to a lack of investment motivation and confidence in the future.

The Central Bank of Taiwan has outlined three principal strategies to decrease excess savings by enhancing the investment rate. These include expanding the capacity of BOTs, directing private capital toward the financial services and wealth management industries, and encouraging manufacturers to leverage their excess savings for cross-border mergers and acquisitions.
 
 

The Taiwan Briefing

#excess savings rate#Taiwan#monetary policy#economic growth#investment#central bank#cross-border mergers#financial services#savings#wealth management

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