The business sentiment of manufacturing companies tumbled to a two-and-a-half-year low in September amid a slowdown in global economic growth, sluggish demand and business worries about a deteriorating outlook for growth, the Taiwan Institute of Economic Research (TIER) said Tuesday.
Data compiled by TIER, one of the leading think tanks in Taiwan, showed that the composite index gauging manufacturing sector business sentiment for September fell by 1.09 points from a month earlier to 85.04, the lowest level since May 2020, when the index stood at 86.03.
The September index marked the ninth consecutive monthly decline, according to TIER.
The TIER data came after the International Monetary Fund’s (IMF) World Economic Outlook released earlier this month forecast that global growth would slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.
“The worst is yet to come, and for many people 2023 will feel like a recession,” according to the IMF report.
Due to a slump in demand for final products, companies in the old-economy manufacturing sectors continued to be pessimistic about their business outlook for September and the next six months, TIER said.
In a September survey, 50 percent of companies in the electronic machinery industry expressed pessimism about their business outlook for the next six months, due to sagging demand for consumer electronics products and the impact of the expanding tech war between the United States and China, according to TIER.
Also in September, the composite index gauging business sentiment in the service sector moved lower by 2.03 points from a month earlier to 94.02, marking the second consecutive month in which the index had declined.
TIER attributed the drop to the decline in the number of days of domestic travel in the month following the end of summer vacation that affected the accommodation service industry and rising pressure from inflation that impacted consumer spending, TIER said.
Meanwhile, TIER released figures for business sentiment in the property sector for which the composite index fell by 2.55 from a month earlier to 90.72 in September mainly due to the sluggish housing market, high cost pressure faced by construction firms, and declining housing transactions in September.
As a result, around 50 percent of respondents in the industry were downbeat about business performance for the month and were also cautious on the outlook for the next six months.
Some people are now maintaining a cautious, wait-and-see attitude about the housing market as tensions between the two sides of the Taiwan Strait weigh on the confidence of home buyers, said TIER.
In addition, the recent declines in the stock market, the central bank’s interest rate hikes and the gloomy economic outlook have also affected people’s willingness to buy homes, according to TIER.
Looking ahead to the next six months, the overall economy is expected to slow and will provide little support to the real estate market, TIER added.
Source: Focus Taiwan News Channel