Wed, Jun 27, 2007 - Page 11 News List

TIER reports low interest rates, higher trade surplus

BEARISH The Taiwan Institute of Economic Research reported yesterday that manufacturers are feeling less optimistic than last month despite growing export figures

By Jackie Lin  /  STAFF REPORTER

The nation's interest rates should remain stable in the next term consumer price hikes are under control, the Taiwan Institute of Economic Research (TIER, 台經院) said in a report released yesterday.

The central bank last week lifted the benchmark interest rate by a larger-than-expected 0.25 percentage points to 3.125 percent, citing possibilities of inflationary risks in the second half of the year.

TIER said the nation's basic rates are still at a low level, which avoids burdening corporate investments.

On the New Taiwan dollar front, TIER expected that the currency would fluctuate within a limited range in the near term as the yuan is likely to gradually go up and international capital might flow into Asia, cashing in on the region's economic growth.

The NT dollar has strengthened against the greenback since last month. It closed at its highest level in more than five months last Friday at NT$32.754 against its US counterpart. Yesterday the local unit edged up NT$0.001 to close at NT$32.764 per US dollar on the Taipei Forex Inc.

Less optimistic

TIER also released a survey of manufacturers which expressed a conservative attitude on the next six months, citing concerns over rising material prices.

Of the manufacturers polled last month, 39.8 percent said they were optimistic about the economy for the next two quarters, down from 48.9 percent in the previous survey.

Those who showed bearish views increased from 13.7 percent to 18 percent last month. The remaining 42.3 percent of the respondents expected no change in the business environment, up from the previous month's 37.4 percent.

The results led to a business climate index for manufacturing at 116.71 points, up by 0.4 percentage points from the revised figure in April, TIER said.

Continuing the strong growth momentum since the end of last year, exports rose by 3.5 percent year-on-year to record US$19.58 billion last month, traditionally a slow period.

The trade surplus for the first five months of the year totaled US$9.13 billion, up by 39.8 percent from the same period last year, government statistics showed.

Bullish

In another survey on the service sector, the think tank said sales in banking, securities, insurance and transport last month all surpassed the levels from a year earlier. Looking ahead, the service industry expected to post revenue growths in the second half, the high-demand season.

The business climate index for the service sector climbed by 3.26 percentage points to 116.36 last month, indicating the respondents bullish outlook on the domestic economy, TIER said.

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