The consumer confidence index this month declined by 10.14 points to a five-year low of 63.37, dragged mainly by drastic corrections on the local bourse, a report released yesterday by National Central University showed.
It was the steepest fall in history and reversed six straight months of upturn, said Dachrahn Wu (吳大任), director of the university’s Research Center for Taiwan Economic Development, which conducted the monthly survey.
The April 3 earthquake, which measured magnitude 7.2 on the Richter scale, and ensuing aftershocks are also to blame, even though the six subindices lost points, Wu added.
Photo: CNA
Confidence values of 100 and higher suggest optimism and points lower than the neutral threshold indicate pessimism.
The reading on stock investment was 24.65, falling an unprecedented 38.76 points from one month earlier, as the TAIEX tumbled more than 1,000 points during the survey period between April 18 and April 21, Wu said.
The TAIEX dropped 3.81 percent on April 19, one day after chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) painted a lukewarm picture for global chip demand for the rest of this year.
Foreign institutional players slashed holdings of local shares by NT$704.79 billion net, which saw the local currency fall to an eight-year low.
There is no need to assign excessive importance to the investment confidence measure, which is volatile and susceptible to political and economic shocks at home and abroad, Wu said.
The TAIEX yesterday reclaimed recent highs, thanks to a spillover effect linked to robust earnings by US technology giants.
The job market subindex fell 5.69 points to 64.72, while the gauge on future household income levels softened 4.85 points to 74.65, the survey showed.
Safety concerns and the many aftershocks would dampen interest in domestic tourism, especially in mountainous areas, which would take a toll on job opportunities in hospitality sectors, Wu said.
Several lodging facilities in Hualien County have temporarily suspended operations, with a few exiting the market for good.
Wu said he is personally skeptical that private consumption would be strong this year after two straight years of rapid expansion.
Public confidence in the nation’s economy for the next six months dropped 4.08 points to 79.6, as geopolitical tensions heighten and the US Federal Reserve could reconsider interest rate cuts amid stubborn inflation, the report said.
Meanwhile, the subindex on consumption of durable goods declined 4.04 points to 107.8, staying in healthy territory, the report showed.
The April 3 earthquake would have significant influence on house prices, as prices of apartments built with better temblor resistance would increase, Wu said.
People also remain discontent about retail prices, with the gauge seeing a reduction of 3.47 points to 28.78.
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