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.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone
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