Public confidence in the economy dropped for the third consecutive month after the government slashed GDP growth for this year and the global recovery fared weaker than expected, a Cathay Financial Holdings Co (國泰金控) survey showed yesterday.
The poll found that 33 percent of respondents expect the economy to deteriorate over the next six months, while 27.7 percent were optimistic about the economy, 33.9 percent expect no changes and the remaining few said they have no idea.
“Economic recovery in developed markets has missed expectations and will weigh on emerging markets” as seen in the nation’s lackluster exports, the survey found.
On May 24, the Directorate-General of Budget, Accounting and Statistics lowered its GDP growth forecast for this year from 3.59 percent to 2.4 percent, while the Ministry of Finance on June 7 reported the nation’s exports grew just 0.9 percent last month from a year earlier.
As for employment, 40.8 percent of respondents expect job hunting to become more difficult, while 11.5 percent said it would become easier and about 39 percent said the job market would hold steady, the survey found.
However, 81 percent of respondents voiced concerns that consumer prices may climb higher in the next six months, with 40 percent forecasting price increases of between 3 percent and 6 percent for basic necessities.
That response bodes ill for consumer spending as people may feel poorer amid heightening inflationary pressure, bucking the government’s effort to boost consumer confidence, Cathay Financial said.
While 64.8 percent of respondents expect their income to stay flat over the next six months, 21.7 percent forecast a reduction and 13.5 percent anticipate an increase. Therefore, 67 percent said now was not the time to buy a home, while 44.4 percent said it was not the right time to sell property.
The figures suggest larger supply than demand after calls on the government to extend a special sales levy on properties sold within five years of purchase, from two years at present, Cathay Financial said.
Meanwhile, the government’s plans to ease capital gains taxes would be limited in invigorating the local bourse, as only 39 percent of respondents voiced a willingness to increase holdings and 61 percent said they preferred to stay put, the survey found.
Cathay Financial is the nation’s largest financial service provider by assets.