TAIPEI: Consumer confidence weakened to 78.36 this month, its lowest in two-and-a-half years, as disappointing economic data led people to adopt a pessimistic outlook on stock investments, a survey by National Central University showed yesterday.
The latest consumer confidence index represented a decline of 1.46 points from last month, with all six sub-indices retreating, the monthly survey found.
The sub-index on stock investments showed the biggest decline, falling 6.5 points to 61.2 this month as uneasy sentiment built up after research institutes cut global and national GDP growth forecasts for this year, said Dachrahn Wu, a professor of economics and director of the university’s Research Center for Taiwan Economic Development, which conducted the survey.
The survey, which polled 2,424 people between Sunday and Wednesday last week, has yet to factor in Britain’s vote on Thursday to leave the EU, Wu said, adding that the confidence level could drop lower as global financial markets factor in the impact.
Market volatility bodes ill for growth outlook everywhere, as consumers tend to restrict spending in times of uncertainty, Wu said.
Private consumption is needed to support GDP growth in Taiwan this year, as exports are expected to stall due to a persistent global slowdown and a lack of technological innovations, he said.
The confidence data and recent economic and financial events lend support to conservatism, Wu said.
The sub-index on durable goods consumption printed 89.55, down 0.55 points from last month, while the gauge on household income shed 0.4 points to 78.45, the survey found.
That means people expect to have less income going forward and will tend to refrain from buying real estate, home appliances and cars, the survey said.
The inflation sub-index fell from 56.65 to 55.85, while the measure on economic outlook softened from 73.05 to 73, according to the survey, consistent with the sluggish economy and the gradual rise in crude oil prices.
The index on the employment outlook saw a decline of 0.45 points to 112.1, but remains above the neutral threshold of 100.
Scores above 100 indicate optimism and points below that suggest pessimism.
Wu said there is no need for the central bank to cut interest rates on Thursday to stimulate growth, as cuts have proven ineffective for the past six months.
Lower interest rates might prompt capital outflows, which is unfavorable for the stability of the TAIEX and for consumer confidence, Wu said.
