Wed, Dec 28, 2016 page12

• Economy gains; consumers still grim

  TRUMP EFFECT: US president-elect Donald Trump’s protectionist trade stance could trigger a trade war with China, disrupting the global supply chain, an academic said

  • By Lisa Wang / Staff reporter
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  Consumer confidence fell to a more than three-year low this month, dragged by concerns over inflation and a less rosy employment market, a survey by National Central University showed yesterday.

  The index shed 0.49 points to 77.22 this month, from 77.71 last month, better than a decline of 1.24 points last month, as the domestic and worldwide economy improves, the survey said.

  With the economy gathering traction, consumer confidence could register a positive movement next month or in the first half of next year, said Dachrahn Wu (吳大任), director of the university’s Research Center for Taiwan Economic Development, which conducted the survey.

  “There is the likelihood of positive growth in the first half of next year as faster GDP growth will help brighten the prospects for the economy, household income, the job market and the stock market,” Wu said.

  The expected increase could be insignificant, as overall consumer confidence has been fragile, with five of the six sub-indices well below the neutral mark of 100. A score higher than 100 signifies optimism, while a score below the threshold suggests pessimism.

  Four sub-indices declined, with inflation sinking the steepest, the survey showed.

  The inflation outlook tumbled 2.75 points to 48.8 this month and the university said expectations of higher food prices ahead of the Lunar New Year holidays accounted for the downbeat outlook.

  The Lunar New Year holidays begin in late January this year.

  “Consumers’ pessimistic views about inflation are different from what the government’s inflation data show,” Wu said.

  The consumer price index has been growing at a pace of less than 2 percent, indicating mild inflation, Wu said, citing statistics from the Directorate-General of Budget, Accounting and Statistics.

  “People are feeling the pinch due to higher food price after the crude oil price stop declining,” Wu said, adding that the mismatch “indicates that the government’s efforts to contain inflation are futile.”

  People with lower education are more sensitive and vulnerable to price volatility in food and daily necessities, the survey showed.

  The job market outlook was also less buoyant this month with the sub-index losing 1.9 points month-on-month to 105.8.

  The public was also pessimistic about durable goods consumption, with the sub-index dropping 0.7 points to 87.95 from last month’s 88.65, the survey showed.

  Economic outlook, one of bright spots, rose 0.25 points to 72.9 this month. The sub-index increased 0.1 points on an annual basis, ending 17 months of decline.

  National Central University professor Chu Yun-peng (朱雲鵬) said that US president-elect Donald Trump’s protectionist trade stance, especially with China, could shake the domestic and global economy.

  “A US-China trade war is likely to occur, which will hurt the global supply chain. Taiwan’s semiconductor industry is part of that supply chain,” Chu said.

  The public was also more positive about the local stock market, with the sub-index jumping 2.4 points to 69.3 this month.

  Despite the improvement, National Central University professor Ruey Yau (姚睿) said the public is bearish about the local stock market due to thin turnover.

  The outlook could continue to be gloomy as more capital outflows are expected when the US Federal Reserve raises interest rates again next year, she said.
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