With the New Taiwan dollar showing no sign of easing its dramatic appreciation, domestic manufacturers have become more pessimistic about the nation's economic outlook, according to a survey released by the Taiwan Institute of Economic Research (TIER) yesterday.
The survey was conducted by TIER among local manufacturers last month.
According to the poll, the business climate of the manufacturing industry dropped from 100.33 points in December to 99.77 points last month. The index has been sliding consistently for the past six months, and is now at its lowest point since June 2003.
"I think the result was directly related to the recent steep appreciation of the local currency against the US dollar," David Hong (
The NT dollar reached its highest level in four-and-a-half years this week, eroding exporters' earnings and competitiveness against other trading rivals, especially those in China.
As a result, 26.2 percent of manufacturers polled said they are pessimistic about the economy for the next half of the year, up from 14.9 percent in the previous survey, while 28.5 percent said they are positive about the economy, up slightly from 23.3 percent in last December.
With the US maintaining a weak dollar policy to pare down its huge deficit, the NT dollar is very likely to keep appreciating, Hong said.
Some analysts have suggested that the NT dollar will rise to NT$30.25 against the greenback in about a month, and Lehman Brothers Bank even predicted that the local currency may shoot to NT$26 against its US counterpart by the end of the year.
The strengthening NT dollar, rising oil and raw materials prices, possible interest rate hikes and China's economic macro-adjustment policy are the main factors expected to have an impact on Taiwan's economic growth this year, Hong said.
The government on Thursday cut its GDP growth forecast to 4.21 percent from 4.56 percent.
TIER, however, last month raised its economic growth forecast for this year slightly to 4.67 percent from 4.62 percent.
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