Taipei, Sentiment toward Taiwan's economy showed signs of weakening in March on expectations that rising inflation will compromise private consumption, according a survey released by Cathay Financial Holding Co.
The caution also reflected the composite index of monitoring indicators flashing a "yellow-blue" light -- signaling sluggish growth -- in January for a second consecutive month, Cathay Financial said.
Affected by the lower composite index and worries over higher inflation, 41.8 percent of respondents said the economy will get worse over the next six months, compared with only 24.2 percent who said it will get better, the survey showed.
That sent the economic optimism index for March falling to minus 17.6 (reflecting the difference between pessimistic and optimistic respondents), down from minus 8.6 in February, Cathay Financial said.
In addition, optimism over current economic conditions also fell to minus 12.8, down from minus 6.2 a month earlier, the survey found.
Inflation was clearly a concern among respondents, 62.4 percent of whom expected local consumer prices to rise more than 1.1 percent in 2018.
An average increase of 1.33 percent was expected by respondents, higher than the government's estimate of a 1.21 percent year-on-year rise.
Cathay Financial said the March index on higher consumer prices was 88.9, the highest level since June 2012 and up from 77.6 recorded in the February survey.
Although 72.2 percent of respondents in the March survey agreed the local economy will grow more than 2 percent in 2018, up from 60.6 percent in the February survey, they only foresaw average economic growth of 2.17 percent, below the government's forecast of 2.42 percent, Cathay Financial said.
The March optimism index toward the stock market was also down, falling to minus 16.4 from minus 15.2 in February, because of fears of a possible global trade war that has sent ripples through global equity markets.
According to the survey, the index gauging investors' appetite to take risks fell to minus 2.7 in March from minus 2.1 in February, a signal that the market could be hurt by lower liquidity as investors become less willing to put their money in stocks, Cathay Financial said.
Some 41.7 percent of respondents cited how the U.S. Federal Reserve will carry out its policy to raise interest rates this year as the biggest factor driving the direction of global financial markets.
The survey, conducted from March 1-7, collected 17,455 valid questionnaires online from clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.
Source: Focus Taiwan News Channel