Pessimism still pervades the public on economy: survey
By John Liu, The China PostTAIPEI, Taiwan -- The public continues to hold a pessimistic economic outlook and does not plan to increase consumption or make investments, according to a survey conducted by Cathay Financial Holdings (國泰金控).
September 18, 2013, 12:11 am TWN
Public confidence in both current economic conditions as well as in future economic growth continues to decline. Due to many uncertainties in the economic environment, investors have become more risk averse in September, according to the survey.
A total of 33.3 percent of the surveyed individuals believed economic conditions have remained unchanged over the last six months, while 31 percent felt conditions have worsened, with only 19 percent responding that the economy has improved.
The survey found that 31.2 percent of respondents believed growth would stay level in the next six months, and 31.5 percent thought conditions would worsen, while 21.7 percent believed the economy would improve.
Reasons Behind the Pessimism
Although the economies of Western countries have experienced growth, factors such as the U.S. Fed's impending draw-down of quantitative easing, sluggish economic growth in emerging markets, war in Syria, and impending electricity price hikes have all added uncertainty to the economic outlook.
Premier Jiang Yi-huah (江宜樺) indicated that electricity prices would increase in October. With the rising price of oil and frequent tropical storms this season, the public anticipates future inflation, the survey said, in turn affecting consumption levels. Fewer purchases of durable goods and big-ticket items may affect momentum toward growth and hurt the economy, according to Cathay Financial Holdings.
Performance of the Finance Sector
A total of 39.5 percent of those surveyed supported the idea of including the finance industry in the government-sponsored Free Economic Pilot Zone, while 16.1 percent rejected the idea, and 44.4 percent held no opinion. Nevertheless, only 39.8 percent surveyed expressed willingness to participate financially in the Pilot Zone.
A general expectation that the U.S. Fed will gradually taper off quantitative easing has sent shockwaves through global stock markets. Risk-weighted assets around the globe have also seen great fluctuations in late August. The MSCI World Index dropped 4 percent in a single month, while the Volatility Index rose substantially. The Taiwan stock market once closed below 8,000 points at the end of August.
Cathay Financial Holdings conducted the public economic confidence survey between Sept. 1 and 7. Online survey questions were sent to the company's members and customers, and 22,072 replies were collected to produce the survey results.