Confidence in the nation’s economy has dropped to its lowest level in nearly two years, as major central banks’ monetary tightening, a local COVID-19 outbreak and China’s strict pandemic prevention measures affected sentiment toward economic conditions, wage growth, consumption of big-ticket items and property purchases, a survey published by Cathay Financial Holding Co (國泰金控) showed on Friday.
The online survey conducted from May 1 to May 7 also showed that Taiwanese have become more pessimistic about the local stock market since last month’s survey, given recent TAIEX volatility amid major central banks’ acceleration of monetary policy tightening.
About 50.1 percent of 21,129 respondents said they were pessimistic about the economy’s chances for improvement in the next six months, with 24.2 percent optimistic, the survey found.
Cathay Financial said the survey results pulled its economic optimism index for the next six months down to minus-25.9 this month, its lowest since May 2020, from minus-16.0 last month.
Taiwan’s economy expanded 3.06 percent from a year earlier in the first quarter of the year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on April 28, while expecting GDP to expand more than 4 percent this year.
However, the central bank earlier this month said that it might be difficult for GDP to grow 4 percent this year, citing adverse effects of the Ukraine war, and global monetary tightening on Taiwanese exports in the second half of the year.
The survey also showed that Taiwanese on average expect the economy to grow 3.09 percent this year, lower than the 3.3 percent estimate reported in last month’s survey, while about 81 percent of respondents said GDP would rise more than 2 percent this year.
Moreover, price increases on fruit, vegetables and daily necessities, along with higher costs for fuel and commodities, have raised concerns about inflation, the survey showed, as nearly 89 percent of respondents expect the consumer price index (CPI) to exceed 2 percent this year, with about 45 percent expecting the index to stand at between 2.5 percent and 3 percent.
Cathay Financial said that Taiwanese expect the CPI to increase by an average of 2.66 percent this year, higher than the 2.36 percent estimated in last month’s survey.
The CPI increased 3.38 percent last month, the second consecutive month that the inflation gauge surpassed 3 percent, and the ninth consecutive month it exceeded the central bank’s 2 percent threshold, the DGBAS said.
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