Although local manufacturing sentiment remained bullish over the next six months, a seasonal slowdown in demand and the government’s plan to introduce a luxury tax could add to near-term uncertainties, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The latest survey conducted by the Taipei-based think tank showed that respondents who felt bullish about business prospects in the near term rose 0.4 percentage points last month to 47.3 percent, from 46.9 percent in January.
However, the business climate gauge for the manufacturing sector dropped to 111.95 points last month, down 5.01 points from a revised 116.96 points in January and its lowest since June 2009.
OPTIMISM
“Strong demand from emerging markets and a continuing global economic recovery drove up local manufacturers’ optimism over the near term,” Chen Miao (陳淼), director of the institute’s macroeconomic forecasting center, told a media briefing.
However, a higher number of manufacturers voiced their concern over a seasonal slowdown in demand after the Lunar New Year holiday and the relatively few working days last month, Chen said.
The government’s plan to introduce a luxury tax also weighed on local construction and investment companies’ outlook for the next three to six months, Chen said.
“The proposed luxury tax could drive down domestic consumption, further hurting the nation’s finances,” Chen said.
The number of housing transactions last month fell in Taipei City and New Taipei City (新北市), with prices also falling 3.5 percent and 8.6 percent respectively, data showed.
“We expect housing prices in these two areas to drop another 15 percent in the second quarter of this year,” TIER associate research fellow Arisa Liu (劉佩真) told a media briefing.
The survey showed that 10.1 percent of manufacturers polled last month were bearish about the business climate over the next six months, up from 7.6 percent in January, while those who said business sentiment would remain the same dropped to 42.6 percent from 45.4 percent.
LIMITED IMPACT
Uncertainties arising from the massive earthquake and tsunami in Japan had not been factored into last month’s survey, but history shows that this kind of event usually has a limited influence on the global economy, Chen said.
In a separate survey, TIER said wholesale and retail businesses in the service sector saw a downtrend in sentiment last month compared with January, as demand weakened after the end of Lunar New Year sales promotions.
As for the financial industry, the TAIEX fell 5.97 percent, with daily turnover averaging NT$139.2 billion (US$4.7 billion) last month. The securities sector’s earnings last month plummeted 96 percent from January to NT$157 million, TIER data showed.
Overall, TIER expects business sentiment to remain upbeat over the next six months, but economic expansion would be constrained by higher uncertainties, Chen said.
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