Business confidence last month softened across sectors, as uncertainty mounted amid sharpening inflationary pressures, a tightening monetary policy and the war in Ukraine, Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The sentiment gauge for the manufacturing industry shed 2.42 points to 101.44, as demand for consumer electronics slowed slightly last month, the Taipei-based think tank said, referring to laptops, smartphones and wearables.
However, demand for components used in electric vehicles remained strong, given clear order visibility for chips and rising selling prices, TIER said.
In addition, digital transformation, 5G technologies, artificial intelligence and Internet of Things applications continued to provide growth momentum, it said.
That explained why the number of companies that held optimistic views about the coming six months gained 1.9 percentage points to 41.5 percent, while firms with a pessimistic outlook increased by a marginal 0.9 percentage points to 9.1 percent, it said.
More than 50 percent of electronics and machinery equipment vendors believed their business would improve in the next six months, but makers of leather and fur products projected a decline, it added.
Base metal product manufacturers voiced positive views as they benefit from supply chain disruptions arising from the war between Russia and Ukraine, the institute said.
“Russia’s invasion of Ukraine is driving up international energy and commodity prices, which in turn might push up Taiwan’s consumer prices by 3 percent this month and stay high,” TIER president Chang Chien-yi (張建一) said.
The military conflict might indirectly dampen Taiwan’s GDP growth by 0.1 percentage points if it persists for two months, the academic said, adding that the impact would deepen if peace remains evasive.
The era of low inflation is over and people have better get used to high consumer prices, Chang said, painting the phenomenon as troublesome, as interest rate hikes have had limited success in curbing imported inflation.
The sentiment reading for service sectors lost 2.1 points to 94.07, as the positive effects of the Lunar New Year holiday came to an end, TIER said.
As a result, retailers held negative views about business moving forward, while telecommunication operators, financial institutions, logistics and warehousing service providers were optimistic, it said.
The confidence level for civil engineering firms, property developers and brokers slid 2.8 points to 107.14, the survey showed.
Companies involved in property development and sales are likely to turn cautious after the central bank last week raised interest rates by 25 basis points, a move that was faster and stronger than widely expected, TIER said.
The central bank could raise policy rates again if inflationary pressures escalate, adding to the financial burden of borrowers, it said.
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