COST OF LIVING/Confidence in local economy weakens in July: survey

Taipei, July 23 (CNA) Confidence in the local economy weakened in July amid worries over falling global growth and rising inflation, according to Cathay Financial Holding Co.

A survey conducted by Cathay Financial, one of the leading financial holding firms in Taiwan, from July 1-7 showed about 21 percent of respondents thought the local economy will improve over the next six months, while 57.3 percent said the economy will deteriorate.

The figures translate into an economic optimism index over the next six months of minus 32.6 in July, the lowest level in more than two years, falling from minus 12.8 in June, according to the financial firm.

The survey also found that economic optimism in the current economic climate dropped from minus 48.2 in June to minus 60.7 in July amid fears over a global economic slowdown and even a recession, at a time when major central banks have started an interest rate hike cycle to take on inflation.

Due to pessimism over the local economy, the index assessing willingness to buy big-ticket items trended lower, dropping from minus 0.8 in June to minus 6.9 in July, while the index gauging willingness to buy homes fell from minus 53.5 to minus 57.9, the lowest in almost five years, according to the survey.

Worries over the global economy have also sent ripples through equity markets at home and abroad, Cathay Financial said, with the optimism index toward the local equity market over the next six months falling sharply from minus 1.6 in June to minus 30.5 in July.

The index assessing investors' appetite to take risks also moved lower from 2.2 in June to minus 14.3 in July, Cathay Financial said.

According to the survey, almost 50 percent of respondents expect the Taiex, the weighted index on the Taiwan Stock Exchange, to remain below 17,000 points in the second half of this year. On Friday, the Taiex closed at 14,949.36 points.

The survey found the index expecting higher wages over the next six months fell from 0.8 in June to minus 4.9 in July, while the index on wage hikes in July fell from minus 0.1 to minus 5.2.

Respondents in the July survey pegged Taiwan's 2022 economic growth at 2.68 percent, down from 2.83 percent in a similar survey in June, with 70 percent saying they expected annual growth to top 2 percent.

In the July survey, respondents expected growth in the local consumer price index to reach 3.03 percent in 2022, up from 2.90 percent from the June poll, while about 59 percent expected the CPI to exceed 3 percent.

The survey collected 19,821 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are wholly owned by Cathay Financial.