Taiwanese consumers have a gloomy outlook for the six months ahead, with a consumer confidence score that is the worst among the 13 Asia-Pacific markets covered by a MasterCard study.
"Restoring consumer confidence should be a top priority for the government in 2006 as Taiwan's economic growth is now supported solely by the external sector," said Yuwa Hedrick-Wong, economic adviser to MasterCard International in Asia-Pacific.
"It is strong electronics export to China that is holding up the economy; and if interest rates rise further as expected, the domestic economy will be extremely vulnerable."
The six-monthly MasterIndex of Consumer Confidence survey reveals that consumer confidence in Taiwan is currently the fourth lowest out of the 26 measurements taken in the market since 1993.
The latest MasterIndex survey was conducted from October 15 to November 4, 2005 and involved 5,404 consumers across 13 Asia-Pacific markets. The MasterIndex is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as the most optimistic, and 50 as neutral. Five economic factors are measured namely employment, the economy, regular income, stock market and quality of life.
The responses are consumers' thoughts on the six months ahead, MasterCard said. Taiwan scored 26.6 percent in the fourth-quarter 2005 MasterIndex, making it the worst performer among the 13 Asia-Pacific markets surveyed.
"There has been widespread public dissatisfaction in Taiwan with its government over its MRT scandal, high unemployment and the increasing dependence on international trade to sustain its economy," study results showed.
"Very weak consumer sentiments on all five factors are evident: Employment, 18.8; economy, 25.2; stock market, 28.1; quality of life, 24.9; and regular income, 35.9."
Taiwan's neighbors however, are quite upbeat about their prospects in the coming months. The survey revealed "a strong sense of consumer optimism in Asia-Pacific markets, despite the many existing and emerging economic challenges."
"Other star performers are Japan and Singapore, who have made significant improvements in their levels of consumer confidence compared to six months and a year ago," the study said.
"Japan in particular is showing a turnaround with consumers registering optimistic scores on all five MasterIndex factors for the first time since the inaugural MasterIndex of Consumer Confidence survey in 1993."
Despite uncertainties such as the emergence of the avian flu and prospects of higher interest rates, continuing high crude oil prices, and terrorism, consumers in Vietnam, Hong Kong, China, Singapore, Malaysia and Japan have a "strongly optimistic" outlook for the next six months, it noted.