Business confidence weakens: TIER – Taipei Times


People had better get used to high consumer prices, TIER said, as interest rate hikes have had limited success in tackling imported inflation

  • By Crystal Hsu / Staff Reporter

Business confidence weakened across all sectors last month as uncertainty mounted amid rising inflationary pressures, monetary policy tightening and war in Ukraine, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院).

The manufacturing confidence gauge fell 2.42 points to 101.44 as demand for consumer electronics slowed slightly last month, the Taipei-based think tank said, referring to computers. laptops, smartphones and portable devices.

However, demand for components used in electric vehicles remained strong, given the clear visibility of chip orders and rising selling prices, TIER said.

Photo: ANC

In addition, digital transformation, 5G technologies, artificial intelligence and Internet of Things applications continued to provide growth momentum, he said.

This explains why the number of companies with optimistic views on the next six months gained 1.9 percentage points to 41.5%, while companies with pessimistic outlooks increased by just 0.9 points. percentage at 9.1%, he said.

More than 50% of sellers of electronic equipment and machinery thought their business would improve over the next six months, but makers of leather and fur products forecast a decline, he added.

Manufacturers of base metal products expressed positive views as they benefit from supply chain disruptions resulting from the war between Russia and Ukraine, the institute said.

“Russia’s invasion of Ukraine is driving up international energy and commodity prices, which could push Taiwan’s consumer prices up 3% this month and stay high,” he said. said TIER Chairman Chang Chien-yi (張建一).

The military conflict could indirectly dampen Taiwan’s GDP growth by 0.1 percentage point if it persists for two months, the academic said, adding that the impact would worsen if peace remained elusive.

The era of low inflation is over and people had better get used to high consumer prices, Chang said, calling the phenomenon embarrassing because interest rate hikes only had one limited success in curbing imported inflation.

The sentiment reading for services sectors lost 2.1 points to 94.07 as the positive effects of the Lunar New Year holiday came to an end, TIER said.

As a result, retailers had negative views on the future of business, while telecom operators, financial institutions, logistics and warehousing service providers were optimistic, he said.

The confidence level of civil engineering firms, property developers and brokers fell 2.8 points to 107.14, according to the survey.

Companies involved in the development and sale of properties should exercise caution after the central bank last week raised interest rates by 25 basis points, a move faster and stronger than expected, TIER said. .

The central bank could raise policy rates again if inflationary pressures intensify, increasing the financial burden on borrowers, she said.

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