Taiwan’s Central Research Institute of Economics released the “Taiwan Consumer Expectation and Policy Response Survey” on the 13th of July, focusing on the willingness of people in the country to have children. The survey results showed that there were three main reasons why people were unwilling to have children. Additionally, the survey indicated that 63.17% of consumers expect the cost of living to increase in a year, with an average expected increase of 8.77%.
According to the preliminary unweighted results of the “Taiwan Consumer Expectation and Policy Response Survey” conducted by the Taiwan Institute of Economics at the Central Research Institute, the top three reasons for not wanting to have children were identified as “the cost of raising children is too high or wages are too low, making it economically unaffordable,” “high housing prices,” and “concerns about changes in their current lifestyle.”
The survey results highlighted that besides high childcare costs and low wages, the high housing prices were also a significant factor in people’s reluctance to have children. It was suggested that when the Taiwan government devises policies to address the declining birth rate, it should simultaneously consider long-term measures to stabilize house prices.
Moreover, 12% of consumers believed that the Taiwanese government providing a monthly subsidy of 5,000 New Taiwan Dollars per child until the age of 18 could increase incentives for having children. However, 35% of consumers felt that even a subsidy of up to 10,000 New Taiwan Dollars per month would not be sufficient to serve as an incentive to have children.
The Taiwan Institute of Economics pointed out that since March, the conflict between the US and Iran has raised international energy prices and led to significant fluctuations, causing a rise in costs of transportation and petroleum-related raw materials domestically, putting pressure on domestic prices. Although the government has largely mitigated the transmission of international energy prices to domestic energy prices, the Consumer Price Index (CPI) has been steadily rising since March. The CPI annual growth rate in May and June exceeded the 2% inflation alert threshold and continued to widen. In June, the imported price index, denominated in New Taiwan Dollars, recorded an annual increase rate of 23.07%, indicating significant upward pressure on domestic inflation due to external cost impacts.
Regarding inflation expectations, the Institute stated that due to possible discrepancies between CPI changes and consumers’ actual perceptions, the survey also measured the expected changes in CPI and living costs. The survey was conducted from March 11 to 29, with an effective sample size of 2,324, and the results showed that 63.17% of consumers expect their living costs to increase in a year, with an average anticipated increase of 8.77%. Among them, the average expected increase in transportation and energy expenses and food costs (including dining out) were 15.87% and 12.54%, respectively.
As for housing price expectations, 30.65% of consumers expected the housing price level to remain relatively unchanged six months later, while 53.11% anticipated a higher price level than in March, indicating that despite a noticeable cooling down of the housing market after the 7th round of credit control measures with a significant decrease in transaction volume and price corrections, more than half of consumers still held expectations of rising prices, with the average expected increase narrowing to 2.04%.
In terms of policy responses, focusing on the issue of universal cash distribution of 10,000 New Taiwan Dollars, the initial estimate of the marginal propensity to consume (MPC) was 0.29. Simultaneously, during the landline and mobile phone survey (effective sample size of 2,216), the estimated MPC was 0.15, similar to the 0.16 obtained from the survey of the distribution of 6,000 New Taiwan Dollars in October 2023. Overall, the MPC for both rounds of cash distribution was significantly lower than 1, indicating that the effectiveness of stimulating consumption or expanding domestic demand may be limited.
Furthermore, the Institute of Economics at the Central Research Institute announced the latest economic forecast for Taiwan, significantly revising the economic growth rate for 2026 to 10.16%, compared to the previous year’s December forecast of 3.71%, marking a substantial increase of 6.45%. Not only is foreign demand strong, but domestic demand is also growing steadily. The contributions of domestic demand and net foreign demand to economic growth are 5.03% and 5.13%, respectively.