Economy may bottom out after 2009 Q1: TIER

“The Taiwanese economy has entered into a bottom during the third and fourth quarters,” said Chen Miao, director of TIER’s Economic Forecast Center. “We stick with our assessment that the economy will gradually bottom out after the first quarter next year.”

Chen made the remarks while announcing the think tank’s monthly business climate report.

As for whether the think tank will revise a forecast it made in November that Taiwan’s economy will grow by 4.11 percent next year, Chen said the think tank will make a revised forecast by January next year.

Things look dire for Taiwan’s economy next year, with some foreign institutional investors calling for a negative growth in 2009.

During the news conference, TIER reported Taiwan’s business climate had worsened during the month of October.

It announced Taiwan’s October business climate index of 88.13, a 10.61 point drop from September’s 98.74 and the lowest since TIER first did this in March 1979.

The index was based on surveys conducted on manufacturers. A total of 68 percent said they were worse off in October than in September, compared to the 23.6 percent who said things were the same and 8.4 percent who said things were better.

As for how things would look within the next six months, 62.6 percent said they would get worse, followed by 34.4 percent who said things would be the same and 3 percent who said things would get better.

“Amid the current economic slowdown, consumer demand has gone down, causing a reduction in manufacturing orders. This is why more manufacturers are holding a pessimistic view for the short term,” Chen said. “Worse still, fewer consumers are purchasing durable goods, despite manufacturers’ efforts to lower prices. This has caused a decline in profits.”

As for the government’s plan to issue consumption vouchers for the Taiwanese, Chen gave his approval. But he stopped short of assessing how effective this would be in stimulating the economy.

“We need more time to observe this,” he said of the vouchers, which the government plans to issue before the Lunar New Year period.

“The Lunar New Year is traditionally the peak season for consumption, in which some NT$5 trillion is circulating in the market,” he said. “As for the vouchers, they are expected to cause the flow of billions of more dollars.”

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