Taiwan economy to take a turn for the worse over the next 6 months: think tank

Taiwan economy expected to fare worse due to stock market volatility, trade war

Taipei skyline (Image from MaxPixel)

Taipei skyline (Image from MaxPixel)

TAIPEI (Taiwan News) – German think tank the ifo Institute for Economic Research’s quarterly analysis suggests Taiwan’s economic fortune will take a turn for the worse over the next six months.

According to experts interviewed as part of the analysis, stock market volatility and the U.S.-China trade war will have bad consequences for Taiwan’s overall economic situation, reported CNA.

The ifo World Climate Index showed a marked decline for the third straight quarter, with the index dropping from +2.9 to -2.2 in Q3 2019, the lowest since Q1 2012.

The deterioration in economic climate was strongest in emerging and developed economies, with the exception of Latin America, which was more optimistic than expected. The advanced economies saw mixed results, with improvement seen in the U.S., and regression in Europe.

According to ifo, experts surveyed felt Taiwan’s economic situation would become worse over the next six months, with production expectations at their lowest level since Q1 2012.

The survey revealed expectations for Taiwan’s overall economy, capital expenditure, and private consumption declined for Q4 2019.

Wu Ming-hui (吳明蕙), head of the National Development Council’s Department of Economic Development said the survey was conducted during a crash of the U.S. Dow Jones stock index, which in turn saw the Taiwan Stock Exchange endure the biggest one-day loss in history. She added this impact on confidence, as well as the overhanging uncertainty of the U.S.-Trade war is likely to have muted expectation.

Wu spoke about potential improvements to capital expenditure coming from speeding up of government works, as well as increased investment from Taiwanese businesses returning to Taiwan as a consequence of the trade war. She added that good investment momentum will help spur Taiwan’s economic growth.