The number of German businesses in Taiwan with a negative outlook on the country's economy has doubled over the past year, according to a survey released Tuesday by the German Trade Office Taipei (GTO).
A total of 41.2 percent of German companies participating in the survey said they believe Taiwan's economy will worsen, compared to 20.3 percent who had a pessimistic outlook in 2015, according to the results of the Business Confidence Survey 2016.
Only 14.4 percent of respondents believed Taiwan's economy would improve in 2016, down from 37.5 percent in 2015 who saw the economy improving.
Some 44.3 percent of German companies expected the local economy to remain unchanged, up slightly from 42.2 percent last year, the survey found.
Revenue and profit expectations were also lower, with 32 percent of respondents expecting their revenues to increase and 23.7 percent expecting their profits to grow this year, down from 58.1 percent and 43.3 percent, respectively, in 2015.
GTO Executive Director Andreas Hergenrother said the decline in optimism compared with last year could be attributed to the slowing of the Chinese economy, which may have lowered demand for some products.
Although expectations for revenue and profit increases were lower than a year earlier, Hergenrother was not alarmed by the result "because the majority still perceive that (the economy) will stay neutral or unchanged."
Reiner Allgeier, managing director of DB Schenker Taiwan, a German global logistics services provider, said Taiwan's 17-month export slump that ended in July likely had an impact on the survey's results.
He believed, however, that there was still plenty of confidence among German businesses that Taiwan will be able to return to a pace of growth similar to that seen in the past.
"But definitely (in) the last two years, the GDP growth is not really very exciting," he said.
The survey found that 43 percent of German companies in Taiwan exceeded or achieved their business targets for 2015, and 38 percent expect to do the same this year.
"Expectations for 2016 are slightly more negative," the GTO report acknowledged, but it said a majority of respondents still expected to "exceed," "achieve," or "mostly achieve" their business targets in 2016.
The survey also found that finding qualified staff remained the top business challenge for German companies in Taiwan for the third consecutive year, followed by the lack of visibility of an industrial strategy, currency risks, retaining qualified staff and cross-strait relations.
The GTO recommended that Taiwan's government pursue a visible industrial strategy, invite business representatives to the strategy development process, and accelerate customs clearance procedures by improving transparency and efficiency.
It also recommended easing work regulations for foreign nationals and strengthening the internationalization of Taiwan's business environment by improving, for example, the English-speaking environment.
As for the German government, the GTO recommended that it support a free-trade agreement and investment protection agreement between the European Union and Taiwan, and strengthen government cooperation with Taiwan in the renewable energy, energy efficiency and other energy-related fields.
The survey, conducted by the GTO between June 14 and July 20, consisted of questions concerning the general business and market outlook and investment climate in Taiwan. It was answered by 109 German companies in Taiwan.
Source: Focus Taiwan