A report issued by the Taiwan Institute of Economic Research (TIER) has shown business owners’ outlook for the future taking a more cautious turn during the month of November.
The report, released on Thursday, examines and quantifies business owners’ views on Taiwan’s economic outlook. The report analyzes sentiment in the manufacturing, service, and construction industries separately.
The report showed sentiment in the service industry continuing to slip for the fourth month in a row. During the month of November, sentiment in the construction industry fell most sharply. The indicator for the construction industry fell by 4.64 points, sinking to 87.68. This was the third month in a row where the indicator for the construction industry fell.
The TIER believes that an economic slowdown in China and weak demand in Japan and South Korea are partly to blame for the growing pessimism in Taiwan. The general economic malaise in Northeast Asia has also hampered growth in Southeast Asia, further dragging down sentiment in Taiwan.
Speaking on Thursday, Director of TIER’s Macroeconomic Forecasting Center, Gordon Sun, said that falling sentiment in the business community has not been as severe as in the past few years. Sun said that the end of the year is not typically peak season for Taiwanese exporters, explaining recent pessimism. He also predicted that business owners’ outlook would become more optimistic in February or March, once business picks up.
TIER also addressed the pessimism in the construction industry. The institute believes that tax reform has led to an increase in the number of policy variables. In addition, the belief that interest rates will soon rise will continue to impact the real estate market for the next six months.