Confidence in local economy weakens in February: survey

Taipei, Feb. 20 (CNA) Confidence in Taiwan's economy weakened in February amid concerns over the COVID-19 pandemic after the country reported a cluster of confirmed cases related to a hospital in Taoyuan, a survey released by Cathay Financial Holding Co. showed Saturday.

Citing the results of the poll, conducted Feb. 1-7, Cathay Financial, one of the leading financial holding companies in Taiwan, said concerns over the pandemic compromised an upbeat mood after the country's economy flashed a yellow-red light in December, pointing to a warming economy for the first time in nearly a decade.

However, due to government efforts to contain the virus, the hospital in Taoyuan reopened on Friday after the first two confirmed cases related to the hospital were reported on Jan. 12, followed by 19 more people, including medical staff, patients, their family members, as well as a caregiver, who all subsequently tested positive for the virus.

The survey found that 38.6 percent of the respondents said the local economy will improve over the next six months, while 30.3 percent said it will deteriorate.

The figures translate into an economic optimism index over the next six months of 8.3 percent in February, down from 18.8 recorded in January, according to the survey.

In addition, the economic optimism index over the current economic climate compared with the previous six months also fell to 15.7 in February from 24.4 a month earlier, the survey showed.

With the weakening faith in the economy, Cathay Financial said, the willingness to buy big-ticket items was affected, with the index gauging sentiment falling to minus 0.2 in February from 5.1 in January, while the index assessing the willingness to buy durable goods also fell to minus 9.6 from minus 7.1.

In February, the index gauging the expectations about a wage hike over the next six months fell to 5.2 from 6.4 in January, as faith in the job market was dampened by COVID-19 fears, according to the survey.

Meanwhile, the index evaluating local employment over the next six months also fell to minus 24.5 in February from minus 22.7 in January, Cathay Financial said.

At a time of volatility in the equity markets in the United States and Europe due to COVID-19 worldwide, leading to lockdowns in many cities, the optimism index toward the local equity market fell to 6.1 in February from 22.9 in January, the survey found.

However, the index gauging the willingness for risk-taking rose to 17.6 in February from 16.8 in January, according to the survey.

The respondents in the February survey pegged Taiwan's 2021 economic growth at 3 percent, unchanged from a survey in January, with about 87 percent saying they expect the annual growth to top 2 percent.

According to the survey, consumer prices in Taiwan are forecast to grow 1.41 percent on average, as 76 percent of the respondents said they expect 1-2 percent growth in consumer prices.

The survey collected 20,329 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are fully owned by Cathay Financial.