Tue, Dec 27, 2011 - Page 12 News List

Business sentiment for Q1 tumbles

BRACING FOR A FALL:The eurozone debt crisis, weak US demand and the possibility of a hard landing in China have taken a toll on the orders and profitability of local firms

By Jason Tan  /  Staff Reporter

Taiwanese manufacturers are not bullish on business sentiment over the next six months, with the business climate indicator last month standing at 89.04 points — its lowest level since February 2009, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.

The unresolved eurozone debt crisis, sluggish demand from the US and the possibility of a hard landing for the Chinese economy have all taken a toll on the orders received by local enterprises and their profitability, causing general pessimism about near-term business prospects, the institute said.

The business climate indicator for the manufacturing sector last month was down 1.93 points from October, the TIER survey showed.

According to the survey, 37.3 percent of respondents in the manufacturing sector said they were pessimistic, up from 30.5 percent the previous month.

Bearish enterprises were mainly found in the textile, chemicals, steel and machinery sectors.

TIER president David Hong (洪德生) said the survey reached conclusions that matched those of industry, projecting that GDP growth for the first quarter next year would bottom out — with growth likely to be less than the current quarter — before gradually picking up momentum quarter on quarter to hit an annual peak in the last quarter of next year.

Meanwhile, 23.1 percent of manufacturing firms said they were optimistic about their own prospects for the next six months, up from 18.1 percent the previous month.

However, about one-fifth of those polled are optimistic about business prospects, the rise in that figure indicating that some manufacturers were still betting on a turnaround in the global economy over the next six months, Hong said.

The TIER survey also showed that the business climate indicator for the service sector also plunged to 89.36 points last month, its lowest since April 2009

That marked a fall of 1.87 points from October, the Taipei-based think tank said.

Securities and insurance companies, as well as transportation and logistics firms, were among those in the services sector saying that they expected the business climate to remain bad for the next six months.

The 9.01 percent fall on the TAIEX last month caused major losses for both investors and securities firms, while those in the transportation sector saw demand slump and shipping prices fall, Hong said.

With no indication that the global economic uncertainties will be resolved any time soon, most financial institutions polled said they did not expect the business climate ahead to be noticeably rosier than current business sentiment indicated, he added.

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