Wed, Feb 13, 2019 - Page 12 News List

Economic conditions deteriorate: Ifo

GLOOM:The government has taken several measures to boost local consumption and encourage China-based firms to return home, which might prove useful, Ifo said

By Crystal Hsu  /  Staff reporter

Taiwan’s economic conditions have worsened significantly this quarter and could deteriorate further in the coming six months as downside risks build up amid a trade row between the US and China, German think tank the Ifo Institute for Economic Research said.

The domestic economic landscape has weakened for the fourth consecutive quarter, with the indicator falling from minus-42.1 to minus-52.9, the Ifo World Economic Survey showed.

The institute has since 1989 conducted the quarterly survey on business cycle developments and other economic factors. The latest survey collected responses from 1,293 experts in 122 nations.

All economic indicators for Taiwan moved lower in negative territory, except long-term interest rates and the strength of the US dollar against the New Taiwan dollar, it showed.

That happens when funds take shelter in time deposits and shun investment for fear of losses.

Experts have been looking at soft exports, imports, capital expenditure, consumer spending and local bourses as the global economy stalls, the survey said.

Taiwan is home to the world’s largest electronic parts suppliers and is taking a hit from inventory adjustments by global technology giants, notably Apple Inc.

More than half of Taiwanese exports are destined for China and the US.

The National Development Council, which helps gather data on Taiwan, said that the government has sought to shore up domestic demand this year through the introduction of stimulus for domestic travel, purchases of energy-saving home appliances and urban renewal.

The government has also eased investment rules to help China-based Taiwanese firms move manufacturing facilities back home, it said.

The measures might help mitigate the pain caused by weak external demand, it added.

The global economic climate reading has dropped from minus-2.2 points to minus-13.1 points this quarter, the survey showed.

The deterioration is more evident in advanced economies, with the US reporting a slump in expectations and assessments, it said.

Experts also revised their estimates significantly downward for the EU, it added.

In contrast, the economic climate in emerging and developing nations has remained largely unchanged, after declining sharply over the two previous quarters, the survey found.

Experts have forecast weaker growth in private consumption, investment and world trade in the next two quarters, it said.

Although a large proportion of respondents said that they still expected interest rates to rise this year, their share has fallen steeply.

They expect the US dollar to depreciate against major currencies worldwide, the survey found.

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