Confidence in local economy improves in October: Survey

Taipei, Oct. 21 (CNA) Confidence in the local economy edged up in October largely on a sharp jump in optimism over the stock market, Cathay Financial Holding Co. said Monday when it released the results of its monthly survey.

The latest survey, conducted Oct. 1-7, found that about 30.2 percent of respondents said the economy improved in October, while 36.6 percent said the economy deteriorated.

The figure translated into an economic optimism index for the current month of about minus 6.4 in October, a slight improvement from minus 6.7 in September.

In addition, the economic optimism index for the next six months also rose to minus 5.3 in October from minus 6 in September, according to the survey.

The improvement in sentiment came after the National Development Council (NDC) reported at the end of September that its composite index of economic indicators rose to 39 in August from 35 in July, reflecting a booming or even overheating economy, Cathay Financial Holding Co. said.

Cathay Financial, the largest financial holding firm in Taiwan in terms of assets, said the improving sentiment also reflected an increase of 0.43 percent from July in the August leading indicators, which gauge the local economy's outlook over the next six months.

Reflecting the improvement in economic confidence in October, the survey found that the index assessing optimism toward the stock market rose to 18.1 from 11 in September, but that the index gauging investor appetite to take risks fell to 17.7 from 17.9, Cathay Financial said.

The improvement in the stock market's outlook was offset to some degree by lower confidence in the real estate market after Taiwan's central bank launched its seventh round of selective credit controls to rein in property speculation on Sept. 19.

According to the survey, the index assessing the willingness to buy homes fell to minus 56.2 in October, from minus 55.1 in September, and the index gauging the willingness to sell homes plunged to minus 11.5 from positive 4.8.

As for the expectations for growth and inflation among respondents, the October's survey respondents pegged Taiwan's 2025 economic growth at 2.87 percent on average, with 49 percent of them saying they expect annual growth to top 3 percent, the survey found.

That was more cautious than the government's forecast of 3.26 gross domestic product growth in 2025 made in August by the Directorate General of Budget, Accounting and Statistics (DGBAS), Cathay Financial said.

At the same time, 68 percent of respondents expected growth in the local consumer price index (CPI) to top 2 percent in 2025, pegging CPI growth at 2.30 percent on average, above the 2 percent alert set by the central bank, Cathay Financial said.

The DGBAS, however, forecast that 2025 inflation will hit only 1.91 percent.

The survey collected 15,933 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are wholly owned by Cathay Financial.