COVID-19 pandemic continues to affect consumer confidence

CNA file photo

TAIPEI (CNA) — An escalation of the COVID-19 coronavirus pandemic around the world continued to deal a blow to consumer confidence in Taiwan, in particular when equity investors were shocked by global volatility, according to National Central University (NCU).

Citing a survey conducted during March 19-23, when stock markets at home and abroad encountered headwinds amid escalating fears over the COVID-19 spread, NCU said the consumer confidence index (CCI) for March fell 5.42 points from a month earlier to 78.51, the lowest level since July 2017, when the index stood at 78.19.

The CCI reflects public confidence in the coming six months in six different areas — employment, family finances, consumer prices, the local economic climate, the stock market and the likelihood of purchasing durable goods.

In March, the sub-index on the equity market fell 11.8 points from a month earlier to 53.70, the lowest level since January 2013, when the figure stood at 52.70, the survey found. The fall was the steepest among the six CCI factors.

Dachrahn Wu (吳大任), director of NCU’s Research Center for Taiwan Economic Development, said the COVID-19 pandemic escalated in the United States and Europe in March, sending the global financial markets into a tailspin, which in turn hit the local equity market.

The benchmark weighted index on the Taiwan Stock Exchange, or Taiex, fell below the 10,000-point mark on March 16, and moved below 9,000 later in the month before staging a rebound in line with the U.S. markets in the wake of a move by the U.S. Federal Reserve to launch unlimited quantitative easing and hopes of a massive stimulus package.

On Friday, the Taiex closed down 0.38 percent at 9,698.92 points after giving up its earlier gains amid lingering fears over the economic impact resulting from the virus spread.

Despite a rebound on Wall Street in recent sessions, Wu said, the jobless claims in the U.S. market last week soared to a record high of 3.28 million, and if the U.S. job market continues to weaken, the country’s consumption power will be eroded, which in turn will hurt the global economy.

Wu said the Fed has sensed the severity of the economic weakness and so launched the unlimited quantitative easing by buying bonds and mortgage-based securities to lend support to the financial markets in the short term, but it remained to be seen how the real economy will be affected in the longer term.

Meanwhile, the sub-index on the timing of purchases of durable goods such as homes and cars stood at 104.45, down 6.6 points from a month earlier, the second-steepest drop among the six factors of the CCI, ahead of a decline of 4.5 points in the sub-index on consumer prices of 46.75, the survey showed.

Wu said the coronavirus spread is expected to have an adverse impact on the local property market in the short term but with more and more Taiwanese companies with overseas operations returning home to invest, demand in the property market could improve.

The sub-index on family finances came in fourth, registering a decline of 4.3 from a month earlier to 91.95 in March, while the sub-indexes on the local economic climate and employment also dropped 3.9 and 1.4, respectively, to 88.95 and 85.25, the survey indicated.

According to the NCU, a sub-index score of 0-100 indicates pessimism, while a score of 100-200 shows optimism.

In other words, the sub-index on possible purchases of durable goods indicates optimism for the coming six months, the university said.

The survey collected 2,795 valid questionnaires from local consumers aged 20 and over. It had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.

Read More from The China Post