Business sentiment in all industries last month weakened further as the number of COVID-19 infections escalated, threatening to push the global economy into a recession, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.
The business confidence gauge for local manufacturers fell 5.31 points to 88.73 from a month earlier, the lowest since January last year, a monthly survey by the Taipei-based institute indicated.
Only 19.3 percent of manufacturers remained upbeat about their business outlook in the coming six months, 6 percentage points lower from a month earlier, while companies with a gloomy outlook rose 9.8 percentage points to 36.9 percent, it said.
“The picture for this month should be bleaker, as the virus outbreak seems not to have peaked yet in light of an increasing number of infections in Europe and the US,” TIER president Chang Chien-yi (張建一) told a media briefing in Taipei.
Unlike the 2003 SARS outbreak, which mainly affected consumer confidence, the COVID-19 pandemic is not only disrupting global supply chains, but is also hurting demand, Chang said.
All manufacturing sectors were hit by the weakening sentiment except for companies that supply the materials used in masks and those that manufacture the machinery needed to produce masks, the survey said.
Food makers also received a boost, after seeing flat business last month, as people fearing a lockdown stormed grocery stores and hoarded canned food.
The number of infections in Taiwan has increased considerably since European countries, the US and others closed their borders, driving up the number of Taiwanese returning home.
The gauge for service-focused firms fell to 86.09 points — the lowest since September 2016 — with most banks, hotels, restaurants and other companies likely to face sluggish business ahead, the survey said.
The confidence measure for real-estate companies declined to 90.02 points, the lowest since June 2017, it said.
Developers and builders have postponed next week’s introduction of pre-sale projects for the spring sales season over concern that the coronavirus is keeping people at home, it said.
If the pandemic continues, the damage to economic activity would surpass belief, Chang said, adding that the local bourse might continue its plunge, despite rebounds this week.
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