Economic recovery becomes uncertain

The Taiwan Institute of Economic Research said yesterday that prospects for the nation's economic recovery have become increasingly uncertain as the composite index of economic performance has continued to fall.

The private think tank reported that the economic performance composite index slid 0.4 percentage points to 108.67 points in July, falling for the second consecutive month.

Researchers attributed the decline mainly to rising uncertainty concerning the revitalization of the international economy and to the fact that domestic manufacturers have turned from conservative to pessimistic regarding Taiwan's economic outlook for the next six months.

Internationally, economic prospects are expected to pick up steam in the second half of this year, but the upswing will be limited in both scale and strength, mainly because the recovery in the US has been weaker than expected, the institute researchers said.

Factors that have affected the US' recovery include worries of a second downturn, the standoff between the US and Iraq, and the continuing threats from international terrorism, the researchers said.

Officials said Taiwan's export trade will continue to pick up steam in the second half of the year, although only moderately, while consumer prices and wholesale prices will climb slightly or remain stable.

With Taiwan's economic fundamentals improving steadily, the researchers said, the New Taiwan dollar, which has depreciated to NT$34 to one US dollar over the past several months, will turn around and appreciate against the greenback in the months to come.

Institute President Wu Rong-i (吳榮義) quoted the results of a recent poll as indicating that most domestic manufacturers are no longer as optimistic as before about their business prospects for the following half year.

In a poll of domestic manufacturers conducted in July, those who said that the economic outlook will remain unchanged soared to 59.3 percent from 54.6 percent in a similar poll conducted in June, according to Wu.

Wu added that those who said they believe that business prospects will take a turn for the better for the next six months fell to 25.6 percent from 34 percent in the previous poll.

Another 15.1 percent of the respondents said that business prospects will take a turn for the worse in the following six months, compared with 11.4 percent in the preceding survey. The poll found that most manufacturers believe that next year will be better than last yearin terms of business prospects.