Consumer confidence in Taiwan weakened to its lowest point in almost 13 years in September as the global economy faced headwinds amid rising inflation and rate hike circles launched by major central banks around the world, a survey conducted by National Central University (NCU) showed Tuesday.
Citing the survey, conducted from Sept. 18-21, the university said the consumer confidence index (CCI) for September fell by 0.49 points from a month earlier to 62.59, the lowest level since November 2009, when the CCI stood at 62.47.
It meant the September CCI was the lowest since the 2008-2009 global financial crisis.
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.
Among the six component indexes of the September CCI, only the sub-index on consumer prices moved higher, by 0.4 from a month earlier to 26.9, while the other five factors weakened, according to the survey.
The sub-indexes on the likelihood of purchasing durable goods, on the local economic climate, and on family finances moved lower by 1.05, 0.8, and 0.75, respectively, from August to 108.35, 78.9, and 73.6, the survey found.
The survey also found the sub-indexes on employment and the stock market moved lower by 0.4 and 0.3, respectively, from August to 63.3 and 24.5 in September. The sub-index on the stock market hit a new low since the NCU started to release the CCI data in early 2001.
As for the timing on buying a home, a separate index jointly compiled by the NCU and Taiwan Realty also dropped by 0.8 from a month earlier to 102.7 in September.
Dachrahn Wu (吳大任), director of the NCU’s Research Center for Taiwan Economic Development, said that as the local economy had showed signs of slowing down with interest rates on the rise, consumer sentiment toward the property market and the possibility of buying durable goods was already affected.
In March, the local central bank kicked off a rate hike cycle by boosting its key interest rates by 50 basis points, but its approach seems to be milder than the United States Federal Reserve, which has aggressively raised rates by 300 basis points to fight skyrocketing inflation, sending the global financial markets into a tailspin.
The Fed has hinted that another 75-basis point hike will come in November.
Wu said the Fed’s hawkish attitude had prompted foreign institutional investors to move their funds out of the region for U.S. dollar-denominated assets, while many foreign investors cut their holdings of shares in Taiwan, which reflected concern about the local economic fundamentals.
With rate hike cycles in the U.S. and Europe expected to continue and China’s zero-tolerance COVID-19 policy still in place, Wu said, global demand could weaken further and affect exports-oriented Taiwanese manufacturers.
Local consumers are likely to become more downbeat in the fourth quarter of this year, he added.
Regarding consumer prices in the local market, Wu cited the survey as saying that about 50 percent of respondents expected consumer prices would rise sharply over the next six months while 45 percent expected a mild increase.
The figures indicated consumers remained mainly pessimistic about inflation, Wu said.
According to the NCU, a CCI sub-index score of 0-100 indicates pessimism, while a score of 100-200 shows optimism. It noted 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 September collected 2,861 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