Taiwan’s consumer confidence index edged down 0.3 points to 101.7 this month from a record-high level last month, but the gauge remained above its average of 90.5 in the past year, according to a survey released yesterday by Australia and New Zealand Banking Group Ltd (ANZ) and Roy Morgan Research.
The above-100 reading reflected respondents’ optimism about the recent pickup in the domestic economy, ANZ-Roy Morgan said.
“The jobless rate in Taiwan fell to a 14-year low, while the stock market performed very strongly. All these bode well for Taiwan’s growth prospects,” Hong Kong-based ANZ senior economist Raymond Yeung (楊宇霆) said in a statement.
The survey showed that household inflation expectations fell sharply to 1.3 percent this month, down 0.9 percentage points from last month. The latest economic report released by the Asian Development Bank (ADB) yesterday forecast that Taiwan would see an average of 0.5 percent inflation this year and 1 percent next year, as oil prices gradually recover, employment prospects improve and incomes rise.
Yeung said he expects the central bank, which is holding its quarterly board meeting tomorrow, to keep interest rates unchanged, on the back of a positive economic outlook and low inflation this year.
“Interest rate normalization will only start in March next year,” Yeung added.
The latest survey, which polled about 1,000 people by telephone, showed that 40.2 percent of Taiwanese respondents were optimistic about the economy over the next 12 months, while 17.4 percent held a negative outlook.
However, the survey showed a deterioration in public confidence over longer-term economic prospects, with respondents who expect economic conditions to remain good over the next five years decreasing to 32.9 percent, down 2.7 percentage points from last month’s survey, according to the statement.
In terms of personal finances, 11.2 percent of respondents said their families were “better off” financially compared with the same period last year, while 29.5 percent said their families were “worse off.”
Additionally, 13.2 percent said now is a “good time” to buy major household items, with 26.2 percent thinking it a “bad time.”
Meanwhile, the ADB report forecast that Taiwan’s GDP would grow 3.7 percent this year and 3.6 percent next year, citing a positive outlook for Taiwanese exports and tourism, as well as repatriated earnings from overseas investments.
Domestic consumption would increase significantly this year, thanks to rising consumer confidence, low unemployment, an expected increase in the minimum wage in the middle of the year, declining fuel prices and increase in Chinese tourism, the report said.
However, the public sector investment outlook for this year and next year is “somewhat less positive, moderated mainly by the government’s continuing efforts to consolidate its budget and uncertainty over energy-related investments,” the ADB said.
As for private investment, the bank forecast an expansion by the start of next year following an announcement from a leading contract chipmaker that it would ramp up production of next-generation chips.
Additional reporting by CNA
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