Taiwan’s economy losing steam: survey

GLOOMY EVALUATIONS::The Ifo World Economic Climate index worsened from minus-2.4 to minus-10.1, while the outlook for Taiwan shed 9.1 points to minus-21.8

By Crystal Hsu  /  Staff reporter

Tue, Aug 13, 2019 - Page 12

Taiwan’s economy is losing momentum, veering away from an earlier course of recovery for this quarter, as global trade conflicts flare up without solutions in sight, the Munich-based Ifo Institute for Economic Research said yesterday.

The institute’s World Economic Climate index worsened from minus-2.4 to minus-10.1 for this quarter after experts revised downward their assessments and expectations in advanced economies and in Asia’s emerging and developing economies.

The think tank’s figure for Taiwan shed 9.1 points to minus-21.8.

“The economic climate deteriorated in all regions because the intensification of the trade conflict is having a considerable detrimental effect on the world economy,” institute president Clemens Fuest said.

The gloomy appraisal was assembled from the institute’s survey of 1,173 experts in 116 countries last month, with Taiwan’s evaluation being drawn from data compiled by the National Development Council.

Positive values indicate expectations of improvement, while negative points suggest deterioration.

The research body previously expected Taiwan’s economy to rebound this quarter, but has now adopted a neutral outlook for the next two quarters.

The conservative turn bucked the nation’s stronger-than-expected GDP growth of 2.41 percent last quarter and the arrival of the peak season for technology products.

US President Donald Trump recently announced a 10 percent tariff hike on US$300 billion of Chinese goods, including notebook computers and smartphones, from Sept. 1.

Experts have much weaker outlooks regarding trade growth, expecting global trade to drop to the lowest level since the outbreak of the trade conflict last year, the institute said.

Weakening global trade hurts Taiwan, home to the world’s largest suppliers of electronics, National Development Council research director Wu Ming-huei (吳明蕙) told reporters.

“The findings might have turned out softer if the experts had the possibility of factoring in the upcoming tariffs,” Wu said.

The survey contained positive views of the nation’s exports, imports, capital expenditures and consumer prices for the second half of this year, but expected stock prices, interest rates and the local currency to decline.

Wu attributed the expected improvement in exports to order transfers and the return of production lines to Taiwan from China.

The government has approved 106 applications from Taiwanese businesses for capital repatriations valued at NT$537 billion (US$17.1 billion), with NT$170 billion to be realized this year, Wu said.

That would translate into a need for new factory and office buildings, as well as workers, Wu said, adding that public infrastructure projects would also benefit the economy.