Public confidence in the nation’s economic outlook took another hit this month amid uncertainty over the government’s nuclear policy, rising prices and expectations of an increased tax burden, a Cathay Financial Holding Co (國泰金控) survey showed.
About 36.9 percent of people polled said they expect the economy to deteriorate over the next six months, outnumbering the 29.7 percent who hold a neutral outlook and the 25.8 percent who feel optimistic, the monthly survey found.
The government’s suspension of construction on some parts of the Fourth Nuclear Power Plant in New Taipei City’s Gongliao District (貢寮) and talk of hiking property investment taxes have stirred unease among the public, said Achilles Chen (陳欽奇), an assistant manager at Cathay Financial’s economic research department.
The rise in anxiety came even though major economic barometers in the US and Europe continue to show improvement, which favors the nation’s export-oriented economy, Chen said.
Further contributing to the gloomy sentiment was the sharp increase in food costs, with 91.9 percent of respondents saying they were feeling the pinch of higher prices over the past six months and 87.4 percent predicting consumer prices to keep going up in the next six months, the survey showed.
Overall food prices last month surged 5.04 percent year-on-year, driven by big jumps in the prices of fruit, meat, seafood and grains, according to the National Bureau of Statistics.
Also weakening sentiment was the expectation of 67 percent that their wages will stagnate in the following six months and the concerns voiced by another 17.5 percent that their income will decrease over the same period, the survey showed, while only 15 percent of respondents forecast a wage increase.
Consequently, 38.5 percent of respondents said they plan to reduce durable goods purchases and 29.2 percent aim to cut down on big-ticket items, the poll results showed, compared with the 17 percent and 24 percent respectively who plan to raise their budgets for those products.
The survey results indicated that the government’s plan to raise holding costs for extra homes is starting to weigh on the property market, as 47 percent of respondents said now is a good time to sell houses, while 78.5 percent believe the opposite.
That pessimist sentiment is likely to slow transactions unless home sellers are willing to lower prices, Chen said.
Weakening sentiment encourages conservative investments and this was reflected in the majority of those polled — 55.4 percent — saying they intend to keep their portfolios unchanged in the next half-year, as well as the 26.8 percent who plan to lower their stock holdings and 18 percent looking to trim their positions, the results showed.
Asked to forecast the TAIEX’s trade range in the next half-year, 32.3 percent of survey participants predicted a correction, 28 percent said the index would pick up and 21 percent expect the bourse to hover around similar levels, Cathay Financial reported.
The majority of respondents — 55.2 percent — said they plan to cash out to avoid unfavorable tax rule changes that would halve tax deductibles on dividend incomes, according to the poll’s findings.
The survey polled 37,230 Cathay Financial customers via e-mail from May 1 to May 7.