TAIPEI: Taiwan’s economy is deteriorating this quarter compared with last quarter, as private investment and consumption showed further weakness, according to the latest Ifo World Economic Survey, which was released on Thursday evening.
The outlook might not brighten in the next six months, as the global economic landscape continues to cloud over, which is unfavorable for the nation’s exports, the German-based institute’s quarterly survey found.
The first-quarter survey results ran counter to statements by the Directorate-General of Budget, Accounting and Statistics that the economy has likely bottomed out and would start to recover soon.
The score for the macroeconomy came in at 1.2 for the current quarter, down from 1.9 in the final quarter of last year, the survey of 1,085 experts from 210 countries said.
The National Development Council helped gather information for the Ifo survey on Taiwan: Scores between 1 and 3.5 indicate contraction, while those at about 5 signify stagnation and values between 6 and 9 suggest a positive trend.
Capital expenditure dropped to 1 this quarter, falling from 2.6 three months earlier, while private consumption softened from 3.5 to 1.4, the Ifo report showed.
The findings suggested a persistent downtrend after the domestic economy slipped into a recession in the second half of last year — with GDP contracting 0.28 percent last quarter and 0.63 percent three months earlier.
The official statistics agency is due to update GDP figures next week.
The Ifo survey assigned a 5.8 score for Taiwan’s six-month outlook, little changed from 5.7 previously, the report said.
Prospects for capital expenditure came in at 5, down from 5.2 in the preceding quarter, while private consumption weakened from 4.3 to 4, the report said.
Exports may stagnate at 5.5 in the coming six months, from a lackluster 5.4 in the previous forecast, the report said. Likewise, imports may stand pat at 5.4 moving forward.
Inflation expectations are the only measure with a positive outlook at 7.4, the report said, as oil price disruptions may taper off even though fuel costs are likely to remain at low levels for an extended period.
Given its heavy dependence on external demand, Taiwan is susceptible to global headwinds that loom larger this quarter as evidenced by drastic corrections in financial markets worldwide, the report said.
The Ifo index for the world economy dropped from 89.6 to 87.8 this quarter, drifting further from its long-term average, it said.
“The economic climate deteriorated in all regions and continues to lack impetus,” the report said, adding that the sharp decline in oil prices seems to have no positive economic benefits.
Experts had expected oil savings to translate into better corporate profits and consumer spending, a forecast that had failed to materialize over the past one-and-a-half years.
The US dollar is considered somewhat overvalued, but survey participants expect the greenback to gain further value over the next six months, the report said.
