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Confidence in Taiwan's economy weakens amid trade war: survey

2019/08/24 20:57:26

Taipei, Aug. 24 (CNA) Confidence in Taiwan's economy weakened in August amid escalating tensions between the United States and China, according to a recent survey conducted by Cathay Financial Holding Co.

Citing the survey, conducted from Aug. 1 to 7, Cathay Financial said 37.8 percent of respondents thought the local economy was doing worse than six months earlier, while 23.1 percent thought it had improved from six months earlier.

That translated into an optimism index for current economic conditions of minus 14.8, down from minus 11.9 in July, Cathay Financial said.

The economic optimism index for the next six months also fell from minus 7.0 in July to minus 16.2 in August as confidence was hurt by the U.S.-China trade dispute and U.S. President Donald Trump's threat to impose punitive tariffs on an additional US$300 billion worth of Chinese goods.

The fall in confidence was also reflected in a decline in the optimism index for the job market over the next six months, which fell from minus 23.2 to minus 26.1 in August, according to the survey's results.

The optimism index for the purchase of big ticket items such as cars and homes remained relatively unchanged in positive territory in August, edging slightly lower to 2.8 from 2.9 in July.

But the index for durable goods purchases fell from minus 13.7 to minus 15.4, the survey showed.

The only area in which survey respondents were more confident than a month earlier came on wage growth, where the number of people voicing optimism and pessimism were relatively equal to begin with.

The optimism index for higher wages in the present rose from minus 1.2 in July to minus 0.8 in August, while the optimism index for higher wages over the next six months rose from 0.1 in July to 0.5 in August, the survey found.

That may have reflected confidence that the government would raise the minimum wage during a meeting of the Basic Wage Deliberation Committee under the Ministry of Labor on Aug. 14, Cathay Financial said, which is in fact what happened.

The committee decided to raise Taiwan's minimum monthly wage by 3 percent to NT$23,800 and the minimum hourly wage by 5 percent to NT$158, effective Jan. 1, 2020.

The generally more pessimistic view of the economy also came despite gains by Taiwan's leading economic indicators in June for the sixth consecutive month, Cathay Financial said.

Those gains were reported at the end of July, shortly before the survey was conducted, but the trade dispute appeared to overshadow the positive news on leading indicators, the company said.

Confidence in the stock market was also dragged down by the more pessimistic mood in August.

The optimism index for Taiwan's stock market fell from minus 3.5 in July to minus 15.9 as U.S. and Chinese stock markets were all dealt blows by the trade friction between Washington and Beijing, Cathay Financial said.

The index gauging investors' appetite for risk in their investments bucked the downtrend, however, rising slightly from minus 2.3 in July to minus 2.2 in August.

Respondents to Cathay Financial's August survey pegged Taiwan's 2019 economic growth at 2.1 percent on average, little changed from a similar poll in July, but shy of the government's forecast in mid-August of 2.46 percent.

The survey collected 12,568 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.

(By Liu Pei-cheng and Frances Huang)
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