Confidence in local economy weakens on geopolitical concerns: Poll

Taipei, July 20 (CNA) Confidence in the local economy weakened in July amid lingering concerns over political tensions in the Middle East, according to a survey released by Cathay Financial Holding Co. on Monday.

Taiwan's largest financial holding firm by total assets said the latest composite index of economic indicators released by the National Development Council for May continued to point to a strong economy, but the war in the Middle East still compromised the sentiment.

Citing the survey conducted during July 1-7, Cathay Financial said 47.8 percent of respondents said the economy improved in July, while 22.1 percent believed it deteriorated.

These results translated into a current-month economic optimism index of about 25.8 in July, down from 32.0 in June.

The six-month economic outlook index also moved lower, falling from 25.5 in June to 20.3 in July.

The survey found consumers turned cautious about spending, with the index for willingness to buy big-ticket items falling from 21.6 in June to 20.7 in July. The index for willingness to buy durable goods also dropped from minus 0.8 to minus 2.1.

Cathay Financial said the Taiex, the Taiwan Stock Exchange's benchmark index, faced a big swing in June. Tech stocks came under heavy pressure amid fears over a rate hike in the United States before rebounding amid optimism about talks between the U.S. and Iran.

The wide fluctuations pushed down the optimism index toward the stock market slightly from 54.5 in June to 53.5 in July and the index assessing the appetite to take risks in the stock market also fell to 39 from 40.6, the survey showed.

The survey also found 57 percent of respondents expected the Taiex to top the 50,000-point mark at one point in the second half of this year. On Monday, the Taiex continued to move lower by 0.52 percent to end at 42,449.70 after a 6.47 percent slump on sell-off in tech stocks.

In the July survey, respondents forecast average economic growth for Taiwan in 2026 at 9 percent, with 59 percent of respondents saying they expected annual growth to top 9 percent, the survey found.

The figures showed respondents were generally more cautious than the government, as the Directorate General of Budget, Accounting and Statistics (DGBAS) estimated the local economy would grow 9.64 percent in 2026.

The poll also found respondents expected growth in the local consumer price index (CPI) to reach 2.3 percent on average in 2026, while about 68 percent anticipated the CPI would exceed 2 percent for the year, above a 2 percent alert set by the central bank.

The DGBAS has forecast that CPI growth will hit 1.93 percent this year.

The survey collected 14,008 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are wholly owned by Cathay Financial.