Manufacturers upbeat about economy, others less so

Manufacturers have expressed confidence in the prospects of the nation's economy for the next six months as exports continue to increase, but those in the oil and power engineering sectors apparently think otherwise, according to a report released by the Taiwan Institute of Economic Research (TIER, 台經院) yesterday.

Of the respondents polled by TIER last month, 35.8 percent said the economy would be in better shape for the next six months, inching up from 35 percent of respondents in March.

The percentage of those saying the economy would deteriorate dropped to 15.8 percent last month, from 17.3 percent in March, the survey showed.

The remaining 48.3 percent of respondents from the manufacturing industry, which contributes around 25 percent of the nation's GDP, said the situation would remain unchanged.

"In terms of individual sectors, oil and power engineering firms said they were bracing for a pessimistic economic outlook, as rising costs of fuel and raw materials, such as copper, have hit them badly," Chen Miao (陳淼), a researcher at TIER, told a press briefing.

Although the majority of the other sectors have a positive outlook on the economy in the near-term, looming electricity price increases could change this, Chen said.

On July 1, the electricity price will be increased for the first time in 23 years, with commercial users of more than 330 kilowatt-hours per month paying a premium of 4.99 percent, and industrial users shouldering extra costs of as much as 7.98 percent regardless of their power consumption.

"Unless manufacturers are able to recover these new power costs elsewhere, we believe the impact will kick in soon," Chen added.

Late last month, TIER predicted that the nation's GDP would grow by only 3.91 percent, due to slowing private consumption and domestic investment.

The figure was revised downward from the 4.02 percent TIER predicted in January.

However, with exports now stronger-than-expected, it is possible that GDP growth could exceed 4 percent, TIER president David Hong (洪德生) said.

The Taipei-based research institute will reveal its next quarterly adjusted GDP forecast in July.

Export orders, especially from the US and China, reached a new high last month, posting annual growth of 18.57 percent and bringing in US$3.87 billion more than a year ago, according to Hong.

"This means that export momentum in the second quarter will remain strong," Hong said.