Public confidence in the economy has weakened this month on expectations of rising inflation and slower economic growth, a Cathay Financial Holding Co (國泰金控) survey released yesterday showed.
Of those surveyed, 27.8 percent expect the nation’s GDP growth to soften to less than 2 percent this year, while the average growth forecast by respondents is about 2.17 percent, slightly lower than the Directorate-General of Budget, Accounting and Statistics’ (DGBAS) 2.42 percent prediction.
Respondents are also feeling the pinch from rising prices of consumer goods, with 40 percent anticipating inflation will reach between 1.3 percent and 1.5 percent this year, with their predictions averaging 1.33 percent, also higher than the DGBAS’ 1.21 percent forecast.
An index measuring the public’s anticipation of higher consumer goods prices surged to its highest level since June 2012, the survey found.
It also showed that the possibility of a global trade war and the long-running bull market have strained confidence in valuations, leading to a second consecutive monthly dip in an index measuring the public’s risk appetite.
An index measuring optimism toward the local equities market also fell for the first time following two months of moderate gains, the survey found.
It is likely that the liquidity-driven rally will slow over the second half of this year, Cathay Financial economic research department assistant manager Achilles Chen (陳欽奇) said.
The US Federal Reserve’s interest rate hike cycle would be the primary factor affecting global stocks this year, according to 41.7 percent of respondents, while 25 percent said the primary variable would be the stability of China’s economic growth or financial markets.
However, only 11.5 percent deemed a US trade row as a major source of risk, the survey found.
As for the TAIEX, 43.2 percent of respondents expect it to reach between 10,500 and 11,000 points in the first half of the year, while 34.7 percent said it would fall to between 9,500 and 11,000 points.
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