Sat, Aug 26, 2006 - Page 12 News List

TIER says nation's business climate is on the up-and-up

By Amber Chung  /  STAFF REPORTER

The nation's business climate has improved for the first time in four months, according to a survey released yesterday by the Taiwan Institute of Economic Research (TIER, 台經院).

TIER's business climate index rose to 105.17 points last month, up from 99.54 points in June. The first improvement since March was attributable to strong demand for the nation's exports, the survey showed.

As many as 41.3 percent of manufacturers were bullish about their economic prospects for the next six months, up from 38.5 percent a month ago. Respondents cited rising export demand going into the second half as the reason for their optimism, the poll said.

However, high raw materials prices continued to worry manufacturers, as 22.8 percent of them expressed pessimism about the economic outlook last month, also up from 18.4 percent in the previous month, it said.

"In principle, we are cautiously optimistic about the economy in the coming months, as things seemed to have improved compared with the first half," TIER president David Hong (洪德生) said at a press briefing.

However, the local service sector appeared a bit more bearish about business prospects -- lackluster domestic demand drove its business climate index down 0.08 points to 120.61 points in the same period.

Restaurants, tourist-related operators and securities houses were concerned about domestic political uncertainties, the survey showed.

"We are concerned that the current political tensions could effect economic growth if they drag on," Hong said, referring to the forthcoming demonstration demanding the resignation of President Chen Shui-bian (陳水扁).

Pointing to the easing consumer bad loan situation and a stable job market, TIER said consumer confidence would not worsen, but would remain fragile throughout next year.

The Taipei-based research institute forecast private consumption to grow by 2.3 percent this year, down from 2.7 percent growth last year.

However, TIER warned that Taiwan risked being replaced by China in the global value-added supply chain.

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