Taiwan’s business climate weakened last month as manufacturing, services and construction sectors all cooled, although firms remained cautiously optimistic about the longer-term outlook, a survey released yesterday by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) showed.
The manufacturing business climate gauge fell to 96.41, down 2.1 points from a revised 98.51 in January, ending a seven-month streak of gains, which TIER Economic Forecasting Center director Gorden Sun (孫明德) said mainly reflected seasonal factors, including the Lunar New Year holiday, rather than geopolitical tensions.
Despite the pullback, manufacturers remained upbeat about their business prospects in the coming six months, with 39.6 percent of respondents expecting conditions to improve, up 13.8 percentage points from January, while 17.5 percent anticipated a downturn.
Photo: CNA
Demand linked to artificial intelligence infrastructure is expected to continue supporting construction of semiconductor and technology facilities, underpinning exports and private investment, Sun said.
The services business climate index slipped to 94.55 from a revised 95.42 in January, ending four months of gains, although holiday spending helped cushion the decline, the institute said.
While spending during the holiday season boosted revenue for travel agencies, restaurants and hotels, financial institutions were more cautious, with about 70 percent of banks and securities firms expressing reservation about business conditions, it said.
Retailers are even more guarded due to inflation concerns tied to rising oil prices amid Middle East tensions, as the survey found that about half of the respondents expect conditions to remain unchanged over the next six months, while nearly 40 percent foresee deterioration.
TIER resident Chang Chien-yi (張建一) said that even if the geopolitical conflict ends, international oil prices could remain around US$100 per barrel, putting pressure on consumer prices.
In construction, the business climate index dropped to 95.81 from 99.92 in January, marking a second consecutive monthly decline.
TIER said the weakness stems mainly from the government’s new soil disposal regulations, which have caused delays and temporary halts in some construction projects.
Meanwhile, the property market remained listless, with transaction volumes declining amid tight credit controls. Although the central bank last week raised the loan-to-value ratio for second-home mortgages for individuals from 50 percent to 60 percent, the institute said housing activity is likely to remain subdued in the near term.
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