With research groups at home and abroad lowering their global GDP growth forecasts for next year, domestic manufacturers and service providers have become gloomier in their business outlook, a survey by a local think tank showed yesterday.
The Taiwan Institute of Economic Research (TIER, 台經院), which surveys different sectors monthly on business sentiment, said the index for the manufacturing industry had dropped 10.61 points to 88.13 points last month, the lowest since the body initiated the poll in March 1979.
The service sector was less pessimistic, shedding 4.04 points to 94.34 points last month, from 98.38 points a month earlier, the TIER report showed.
Chen Miao (陳淼), a TIER researcher, said the number of manufacturers with a bearish outlook had risen 17.3 percent last month, while neutralists increased from 31.5 percent to 34.4 percent.
Chen said the global economic downturn had dented demand for Taiwan-made goods and squeezed manufacturers’ earnings.
Exports, the nation’s main driver of economic growth, declined 8.3 percent last month, with the falling trend expected to persist until the final quarter of next year, government figures showed.
“That explains why respondents with a bullish outlook hit a record low of 3 percent,” Chen told a media briefing.
The economist said the service industry did not fare any better, with the benchmark TAIEX plunging 14.84 percent and the New Taiwan dollar weakening 2.3 percent last month, while raw material prices remained high over the same period.
TIER president David Hong (洪德生) said the lack of public confidence compounded the financial malaise — despite a string of stimulus measures implemented by the government.
The government has announced a spate of stimulus packages worth billions of NT dollars to expand domestic demand through borrowing.
“Recovery may prove evasive as long as the United States and Europe remain shrouded in recession,” Hong said, adding that exports accounted for more than 60 percent of the nation’s GDP.
Analysts at Fubon Financial Holding Co (富邦金控) expressed similar views.
Rick Lo (羅瑋), senior vice president of macroecnomic research at Fubon Financial, said the financial crisis was now under control, thanks to a concerted effort by major countries. However, it would take 12 to 18 months for the damage done to the global economy to heal, he said.
“The key to global recovery lies in the US economy,” Lo said. “It has to pick up before other countries can follow suit.”
To that end, Lo said, the greenback had to remain strong and US real estate prices would have to stop falling.
Julia Chen (陳艾儒), vice president at Fubon Securities Investment Services Co (富邦投顧), said that while different research bodies put the GDP growth forecast for Taiwan at between 1.5 percent and 3 percent for next year, even achieving those goals would be insignificant.
“Investors may seek shelter in time and savings deposits before recovery, but doing so promises little profit,” Julia Chen said.
Cindy Yu (尤敏君), vice president at Taipei Fubon Bank (台北富邦銀行), said central banks worldwide would continue to loosen monetary policy and cut interest rates later this year and the first half of next year.
Yu said she expected the central bank to cut the discount rate by another 25 basis points next month and lower it to 2 percent next year from the current 2.75 percent.
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