Consumer confidence weakened to 78.66 this month, down 0.9 points from last month, as consumers turned pessimistic about the economy, stock investment and the job market, a survey by National Central University showed yesterday.
While the change in sentiment is small, the confidence level is the lowest since January 2014, suggesting a conservative attitude about consumption, said Dachrahn Wu (吳大任), director of the university’s Research Center for Taiwan Economic Development, which conducted the survey.
The confidence level is likely to consolidate next quarter depending on whether the improvement in exports can offset the decline in tourism activity, he said.
The subindex on inflation reported the biggest drop of 2.6 points to 52.45, suggesting the public is discontented with consumer prices, Wu said.
People were also downbeat about equity investments, with the subindex dipping 2.1 points to 68.7, the survey found.
“Hot money inflows accounted for recent rallies in the local bourse and New Taiwan dollar, and the central bank had better cut interest rates again tomorrow to help ensure the economy remains on a stable course of recovery,” Wu said by telephone.
The mild inflation and strong NT dollar warrant further monetary easing and global central banks have adopted similar measures to spur growth, he said.
Interest rate cuts can also mitigate the appreciation caused by global funds searching for better returns worldwide, he added.
A strong NT dollar is creating foreign-exchange losses for Taiwanese exporters and weakening their competitiveness, Wu said.
The central bank has cut borrowing costs by 12.5 basis points four times over the past year to narrow the gap between potential and actual GDP growth.
Day Jaw-yang (戴肇洋), an adviser at Contemporary Taiwan Development Foundation (現代財經基金會), said by telephone that interest rates are low enough and the central bank might hold rates steady now that economic growth has returned to positive territory.
“Positive economic data render further rate cuts unnecessary,” Day said, adding that other government agencies should do their share to help lift the economy.
The public is less upbeat about the job market, with the subindex slowing by 0.8 points to 109.6, the survey showed, as the jobless population rose over the summer.
The economic outlook subindex shed 0.05 points to 73.3.
Consumer confidence scores between zero and 100 indicate pessimism and values above the neutral mark of 100 signify optimism.
The subindex on household income gained 0.1 points to 78.9 and the subindex on durable goods consumption edged up 0.05 points to 89, according to the survey.
The parlous pace of the increase suggests an extension of the “status quo” rather than an improvement in sentiment, Wu said.
Sluggish property transactions confirm a general conservative attitude toward consumption, he said.
Wu said he expected the government to delay property tax hike plans to avoid hurting consumer confidence.
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