The business outlook of local firms in a variety of sectors turned increasingly bleak last month as the nation’s GDP growth struggles to stay above the 1-percent level this year, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.
“The economy may have difficulty logging growth of more than 1 percent this year if the equity slumps persist, hurting consumer confidence and domestic demand,” said Gordon Sun (孫明德), director of the Taipei-based think tank’s economic forecasting center.
Private consumption, which had been relied upon on to drive the economy this year amid faltering exports, looks set to miss its target given the decline in retail and commercial sales last month, Sun said.
Photo: Wang Meng-lun, Taipei Times
Ongoing stock market corrections would further sap consumer spending, dragging GDP into the negative zone this quarter, from a neutral 0.1 percent growth as projected by the Directorate-General of Budget, Accounting and Statistics on Aug. 14, Sun said.
The business climate gauge for the manufacturing industry stood at 92 last month, down 1.62 points form the revised 93.62 in June, the TIER’s monthly survey showed.
Only 18.8 percent of manufacturers held optimistic views about their business for the coming six months, down 6.4 points from one month earlier, the survey found.
Manufacturers’ pessimism rose 14.2 points to 31.7 percent, reflecting tepid demand abroad, the survey found.
“It is unusual that companies should turn conservative with the advent of high sales season… They are likely to fail to receive new business orders,” Sun said.
Worse-than-expected exports and private consumption would put the official forecast of 1.56 percent GDP growth this year out of reach, he said.
Firms involved in data storage, machinery equipment and car production are especially pessimistic, the survey found.
The business sentiment reading for the service sector was 88.39 last month, a loss of 2.57 points from the revised 90.96 in June, the survey said.
Securities houses bore the brunt of drastic stock plunges and companies involved in retail sales have the lowest confidence about business prospects, the survey said.
The business climate score for the construction industry registered 79.75 last month, representing a tiny rebound of 0.85 point from one month earlier, the survey said.
The central bank’s partial easing of mortgage restrictions accounted for the improvement, TIER said, adding that some builders and developers may launch home projects next month in line with traditional seasonality.
However, the property market remains soft because of unfavorable policy changes and political uncertainty linked to the presidential and legislative elections in January, the TIER said.
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