Confidence in Taiwan Economy Improves

Confidence in the local economy improved in August after the government reported better than expected gross domestic product growth for the second quarter of the year, according to Cathay Financial Holding Co.

Cathay Financial, one of the leading financial firms in Taiwan, said sentiment toward the local economy also reflected the improving outlook for the local job market and consumption, CNA reported.

Citing a survey, Cathay Financial said 17.2% of respondents said the economy had improved from six months earlier, while 46.8% said the economy was worse. That translated into an economic optimism index figure for the economy of minus 29.7 in August, up from minus 32.4 in a similar poll conducted in July, ending five straight months of decline.

The economic optimism index for economic conditions over the next six months also rose in August, reversing a five month slide. After falling to minus 32.7 in July, it rose to minus 31.5 in August.

The slightly improved sentiment on the local economy came after the Directorate General of Budget, Accounting and Statistics reported in late July that GDP grew in the second quarter by 3.29% from a year earlier, beating its earlier forecast of 3.08% in May.

The Cathay Financial survey was conducted from Aug. 1-7. After the poll was completed, the DGBAS revised second quarter GDP growth upwards to 3.30% in mid-August. The improved outlook toward the economy was also reflected in the local job market. The optimism index for the labor market for the next six months edged higher from minus 36.9, in July to minus 36.4 in August, Cathay Financial said.

However, the optimism index for the labor market right now fell from minus 32.8 in July to minus 34.2 in August, the financial firm said.

The survey found the index gauging the willingness of consumers to spend on big ticket items rose from minus 8.5 in July to minus 5.9 in August, while the index on the willingness to purchase durable goods also grew from minus 25.0 in July to minus 24.3 in August.

Cathay Financial said that as long as people are more willing to spend on big ticket items and durable goods, Taiwan’s private consumption growth momentum is expected to continue for the rest of the year.