Taiwan’s consumer confidence index (CCI) recovered slightly in August after six months of decline, but there is still concern about the outlook for the domestic economy, National Central University (NCU) said Monday.
Citing a survey it conducted Aug. 18-21, NCU said the CCI rose 0.03 points in August from a month earlier to 63.08, after dipping in July to its lowest level of 63.05 since November 2009, when the index stood at 62.47.
The CCI gauges the level of confidence people have regarding employment prospects, family finances, consumer prices, the local economic climate, the stock market, and the likelihood of purchasing durable goods over the next six months.
In August, two of the six sub-indexes — the likelihood of purchasing durable goods and the local economic climate — rose by 0.4 and 0.15 points, respectively, from a month earlier to 109.4 and 79.7, the survey found.
However, the sub-index for consumer prices dropped by 0.4 points to 26.5, its lowest level since November 2008, when the sub-index stood at 24.70, the survey indicated.
The sub-indexes for family finances, employment, and the stock market remained unchanged at 74.35, 63.7 and 24.8, respectively, according to the survey.
Dachrahn Wu (???), director of NCU’s Research Center for Taiwan Economic Development, said the CCI increase in August was marginal, statistically, so he would prefer to say it had leveled off from a month earlier.
With interest rates on the rise, private consumption and investment may weaken in the months ahead, which would stifle domestic economic growth, he said, noting that the global economy continues to be affected by rising inflation.
In a bid to tackle the inflation problem, the U.S. Federal Reserve has been aggressively hiking interest rates, implementing an increase of 225 basis points since March, and it is likely to raise them again, by 75 points in September, Wu said.
The interest rate hikes may hamper consumption in the U.S., the world’s largest economy, leading to reduced imports, he said.
Such a cutback would have a big impact on Taiwan’s exports, as the U.S. is one of its biggest buyers, Wu said.
In addition to the worry over Taiwan exports, there is also growing concern that high inflation will affect domestic consumption, he said, adding that those are some of the factors contributing to his downbeat outlook for Taiwan’s economy in the second half of the year.
In July, export orders in Taiwan fell 1.9 percent from a year earlier, ending two months of year-on-year growth and missing a forecast of a 0.4-3.1 percent year-on-year increase.
Also in July, the CPI rose 3.36 percent from a year earlier, recording an increase of more than 3 percent for the fifth consecutive month, driven primarily by higher food and fuel prices.
Meanwhile, another NCU survey conducted jointly with Taiwan Realty, showed a monthly increase of 0.2 points in August of the index that indicates whether it is a good time to buy homes.
Wu said while that may have been a signal that investment in the housing market would be one way to deal with inflation, the very small rise of the index indicated lingering caution amid uncertainties over the economy.
According to NCU, a CCI sub-index score of 0-100 indicates pessimism, while a score of 100-200 shows optimism, NCU said, noting that optimism was seen only in the sub-index on the likelihood of purchasing durable goods over the next six months..
The NCU survey in August collected 2,773 valid questionnaires from consumers in Taiwan aged 20 and over. It had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.
Source: Focus Taiwan News Channel