A survey of local manufacturers last month showed that less than 40 percent were confident about economic prospects in the next six months amid concern over the European debt crisis and slowing Chinese economic growth, the Taiwan Institute for Economic Research (TIER, 台經院) said.
The Taipei-based think tank said that only 38.2 percent of companies felt optimistic about the near-term economic outlook, compared with 40.4 percent in the previous month, while those that were bearish about prospects rose to 13 percent, up from 7.9 percent in April.
“Although exports and export orders were impressive last month, the eurozone debt crisis still caused the stock and foreign exchange markets to plunge,” said Chen Miao (陳淼), director of TIER’s macroeconomic forecasting center.
There is a discrepancy between how manufacturers feel about the economy and what the economy appears to be, he said.
Chen added that downstream companies appeared to have become more conservative about market demand amid fears the European credit crisis could further affect consumption in the West.
The number of companies that remained neutral about the economic outlook in the next six months also dropped to 48 percent last month, from 51.7 percent in April, TIER’s report said.
In addition, manufacturers surveyed last month felt more pessimistic about the current state of the economy than they did in April, with the percentage of those who were bullish dropping 4.6 percentage points and those feeling pessimistic declining 0.7 percentage points, the report said.
In another survey on the services industry last month, TIER said wholesale and retail businesses saw an improvement in sentiment compared with April, as convenience stores, supermarkets and grocery stores all posted increased revenues amid an economic recovery.
Sentiment in the financial sector was not as bullish, however, amid fears of a fallout from the European debt crisis and disappointment over a tentative “early harvest” list in the government’s proposed trade pact with China.
Overall, companies said they were still upbeat about the economy over the next half year, with food and beverage and tourism sectors remaining bullish, and investment in financial products and personal consumption likely to increase, the survey said.
Meanwhile, TIER said Taiwan needed to focus on enhancing its industrial competitiveness, as the proposed trade pact with China would produce effects “within a certain timeframe.”
“Taiwan will again have difficulty competing [with other countries] if it fails to sign free-trade agreements with other countries or to upgrade its industrial competitiveness within two years of signing the economic cooperation framework agreement (ECFA),” TIER president David Hong (洪德生) said.
Taiwan and China are expected to sign the trade pact within the next few weeks.
ADDITIONAL REPORTING BY CNA
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