Full-fledged economic rebound still a ways off, TIER reports

The China Post news staff

TAIPEI, Taiwan — A range of domestic and international factors should keep Taiwan cautious regarding the positive economic outlook for the next six months, the Taiwan Institute of Economic Research (TIER) said yesterday.

The country’s economic outlook is in the shadow of several international uncertainties, including U.S. fiscal headaches, the Japanese yen’s depreciation, weaker performances in China and the eurozone, and tension in the Korean Peninsula, said TIER President David Hong. A complete rebound may take place after these uncertainties have been resolved, Hong added. According to the institute’s monthly report, the indices for both their manufacturing and service industries fell slightly in February, breaking a run of three consecutive monthly increases. Among service companies surveyed, securities and retail industries reported higher percentages of positive views for February, while the percentages of negative views were higher for the telecommunications, insurance, transportation and warehouse industries. The banking industry, in particular, was more optimistic about the six-month outlook.

Of manufacturers surveyed, 13.7 percent expressed a positive view about the economy in February, a significant decline from the 30.4 percent in January; 48.6 percent expressed a negative view, an increase from 20.6 percent in January. Among all manufacturers surveyed, the precision industry and rubber product industry both had higher percentages of positive perspectives for February, while other industries had higher percentages of negative views.

As for the future forecast, manufacturers with an optimistic outlook for the economy in the next six months increased from 4.6 percent in January to 49.9 percent in February, the highest figure since February, 2010.

“This means that overall the manufacturing industry is still optimistic about the economic outlook and the overall economy is improving,” said Gordon Sun, deputy director of the institute’s macroeconomic forecasting center.

Despite optimism expressed by the local manufacturing industry for the outlook of the second half, TIER has remained conservative because of several uncertainties in international markets, according to Sun.

“Despite our optimism about the economic outlook for the next six months, we should stay alert (of any important market event),” said Hong. Although the U.S. economy has rebounded, the recovery of Japan and Europe and the growth of China have slowed. In addition to these factors, tension in the Korean Peninsula and monetary policy of the Bank of Japan are also capping optimism in Taiwan, Hong added.