Confidence in local economy weakens in September: Poll

Taipei, Sept. 21 (CNA) Confidence in the local economy continued to weaken in September amid concerns over a possible recession in the United States and escalating geopolitical tensions, according to Cathay Financial Holdings.

Citing a survey conducted from Sept. 1-7, Cathay Financial, the largest financial holding firm in Taiwan in terms of assets, said about 30 percent of respondents said the economy improved in September, while 36.8 percent said the economy deteriorated.

The figure translated into an economic optimism index for the current month of about minus 6.7 in September, down from 3 in August.

In addition, the economic optimism index over the next six months also fell to minus 6 in September from minus 3.2 in August, the survey found. The September index fell to the lowest level since November 2023, when it stood at minus 9.1, Cathay Financial added.

The downbeat sentiment toward the economy has affected the willingness of the public to spend lavishly with that particular index moving from 11.3 in August to 10.5 in September, while the index tracing willingness to purchase durable goods rose slightly from minus 8.3 to minus 8.0, Cathay Financial added.

With many banks tightening their lending to home buyers, at the urging of the central bank, the index assessing willingness to buy a home fell from minus 44.8 in August to minus 55.1 in September, while the index gauging the willingness of home owners to sell their property also moved lower from 11.2 to 4.8.

In the survey, 70.7 percent of respondents said it was not currently the right time to buy a home as they assumed it would not be easy for them to secure a mortgage.

According to the poll, the index gauging home buying interest fell from minus 44.8 in August to minus 55.1 in September, with the index assessing home selling willingness also falling from 11.2 to 4.8.

After the survey was conducted, the central bank imposed a seventh round of selective credit controls on the home market on Thursday, with bank governor Yang Chin-long (楊金龍) saying the effects of the latest measures is almost equal to the combined effect of the previous six rounds and would have a major impact in a bid to prevent the development of a property market bubble.

Market analysts expected the latest measures to push down transaction volume and home prices to face downward pressure in the fourth quarter.

Despite weaker sentiment toward the economy, the stock market optimism index rose to 11 in September from 5.3 in August on expectations that the U.S. Federal Reserve would kick off a rate cut cycle, but the index assessing the appetite to take risk fell from 19.4 to 17.9, according to Cathay Financial.

On Wednesday, the Fed lowered its key interest rate by 50 basis points, marking the first rate cut in four years.

Respondents in the September survey pegged Taiwan's 2024 economic growth at 3.03 percent on average, down from 3.09 percent in a similar poll in August, with 56 percent saying they expect annual growth to top 3 percent.

That was more cautious about economic growth in 2024 than the government as the Directorate General of Budget, Accounting and Statistics (DGBAS) forecast in August the local economy will grow 3.90 percent this year.

In the September survey, 58.6 percent of respondents expected growth in the local consumer price index (CPI) to top 2 percent over the next 12 months, up 15.8 percentage points from the August poll. Cathay Financial said the public largely anticipates inflationary pressure will grow over the next 12 months.

The DGBAS has forecast the CPI will grow 2.17 percent in 2024 but that growth will moderate to 1.91 percent in 2025.

The survey collected 15,265 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are wholly owned by Cathay Financial.