Fri, Aug 21, 2015 - Page 13 News List

Economic forecast discouraging: Cathay

BLEAK FUTURE?A financial survey shows little consumer confidence in the economy after the announcement of lowered GDP growth expectations and next year’s election

By Ted Chen  /  Staff reporter

Beset by discouraging economic data such as exports and manufacturing output, people have a dismal view of the nation’s economic prospects this month, compared with the generally neutral outlook of last month, according to a survey released yesterday by Cathay Financial Holding Co (國泰金控).

About 30.8 percent of respondents said they expect the economy to see a moderate decline over the next six months and 18.9 percent said the economy would worsen seriously over the period, Cathay Financial said.

In this month’s survey, the economic optimism index dropped to minus-46.6, compared with minus-10.5 last month, while the index measuring economic optimism over the next six months slid from minus-10.5 to minus-33.3, representing the most severe decline since the capital gains tax on securities transactions was introduced in 2012.

The survey followed the government announcement last week that it lowered its economic growth forecast for this year to 1.56 percent from the previous estimate of 3.28 percent, after the second-quarter GDP rose 0.64 percent from a year earlier on sluggish exports, far short of the government’s forecast of 3.05 percent.

Downbeat economic prospects have driven investment outlooks on the local stock market to a new low, as the benchmark TAIEX has corrected about 17 percent over the past three months.

The index closed 0.10 percent higher at 8,029.81 points yesterday.

The survey showed that 54.7 percent of respondents expect the TAIEX to decline over the next six months, compared with 39.7 percent last month, while the proportion of investors looking to reduce their portfolios rose from 24.4 percent to 34.2 percent, it showed.

The survey also indicated that investors are concerned over increasing political risk, with 35.2 percent concerned about next year’s presidential and legislative elections, 17.9 percent concerned about the eurozone crisis and 17.2 percent mentioning the downturn in developing economies, with 16.5 percent uneasy about the tumble of Chinese stocks.

Only 13.2 of respondents said they were concerned about the anticipated interest rate hikes by the US Federal Reserve, according to the survey.

Dwindling economic confidence also affected the optimism index in wage growth over the next six months, which dipped from 3.9 to minus-4.8 last month.

Expectations for employment also plummeted from 19.9 to minus-34.1, and willingness to purchase big-ticket items dropped from 7.2 to minus-5.2, the lowest since June last year, the survey showed.

Cathay Financial’s monthly survey, which collected 15,994 valid responses from its banking and insurance customers, was conducted from Aug. 1 to Aug. 7.

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