The Russia-Ukraine war is expected to cause the prices of food and materials in Taiwan to rise. That’s according to the governor of Taiwan’s central bank, Yang Chin-long, who spoke to a lawmakers on Thursday.
Yang told them that the war has had only a small effect on Taiwan’s economy so far, and that the financial impact is still under control. But he says that even minor changes in international trade could trigger inflation in Taiwan, causing the prices of domestic products to rise.
Yang adds that the economy is stable and still growing, so Taiwan is unlikely to experience “stagflation” anytime soon. Stagflation happens when the economy isn’t growing, but a lot of people are unemployed and prices are going up. Yang points out that average prices in Taiwan only rose about 2% last year, compared to other countries like the United States where prices rose 5%.
In order to compensate for the 2% increase in prices, Yang suggests offering at least a 4% increase in workers’ salaries. The government has already taken steps to prevent too much inflation, and Yang says that those measures will be gradually removed only when prices stabilize.
Yang says that authorities will continue to track changes in the economy, and they will discuss any further actions at the bank’s board of directors meeting Thursday next week.