The nation’s economic growth is poised to rebound after the first quarter as the business outlook of Taiwanese companies across a variety of sectors is showing signs of improvement, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday, citing a survey conducted last month.
The business climate gauge for the manufacturing industry rose 1.27 points from the previous month to 92.26, the gauge for the services industry increased 1.3 points to 86.07 and the gauge for the construction industry rose 1.47 points to 79.43, TIER’s monthly survey showed.
“The nation’s economic situation and prospects look like the weather forecast lately,” TIER economic forecasting center director Gordon Sun (孫明德) told a news conference in Taipei. “They change constantly.”
The economy performed poorly last month, as exports dropped 11.84 percent from a year earlier to record the 13th consecutive monthly decline, while domestic production was negatively affected by declining exports and a magnitude 6.4 earthquake that hit southern Taiwan on Feb. 6, TIER’s report said.
However, data for this month are likely to paint a better picture for the nation’s economy, Sun said, adding that the survey also showed that 40.4 percent of respondents in the manufacturing industry said the economy would improve over the next six months, up from 29.7 percent in January.
Sun said that if annual contraction in exports narrow to single digits and the growth rates for both export orders and industrial production return to positive territory this month, “a potential economic rebound in the second quarter would be possible.”
Even though Europe, Japan and China are continuing with their loose monetary policies amid a slowing economy, the US Federal Reserve’s decision to keep its interest rates unchanged and rebounding crude oil prices have implied that the outlook for the global economy might not be as gloomy as earlier this year, TIER said.
On Thursday, the central bank cut its policy interest rate by 12.5 basis points to 1.5 percent in a move to stimulate the economy while curbing potential capital inflows.
Sun said that the latest rate cut, the third since September last year, came as no surprise, as the central bank has limited monetary tools in the face of global monetary easing by its peers.
Apart from rate cuts, the central bank also loosened credit restrictions on the housing market, except for “luxury” homes.
“We consider the easing of credit controls to be a boost to the economy this year,” TIER associate researcher Arisa Liu (劉佩真) said. “However, the impact on the housing market will not be as significant and direct as a cut in housing prices.”
The building material and construction sub-index, which reflects the general performance of property stocks, yesterday rose 3.98 percent, bucking the TAIEX’s 0.44 percent decline.
However, TIER said the growth in the property market in the long term would depend on local lenders’ credit measures and property developers’ intention to cut housing prices.
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