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Confidence in Taiwan's economy improves amid eased trade tension

Survey conducted Oct. 1-7 by Cathay Financial indicates increased optimism in economic outlook

Raohe Night Market, Taipei (photo by Unsplash user Vernon Raineil Cenzon)

Raohe Night Market, Taipei (photo by Unsplash user Vernon Raineil Cenzon)

Confidence in Taiwan's economy picked up in October amid eased concerns over a trade dispute between the United States and China, as both sides agreed to resume high-level talks to resolve the situation, according to Cathay Financial Holding Co.

Citing a survey conducted Oct. 1-7, Cathay Financial, one of the leading financial firms in Taiwan, said 40 percent of respondents to the poll thought the local economy was doing worse than six months earlier, while 20.2 percent thought it had improved

That translated into an optimism index for the current economic condition of minus 17.8 in October, up from minus 27.2 in September, the survey found.

The economic optimism index for the next six months also rose from minus 22.5 in September to minus 15.1 in October, the survey indicated.

The survey was conducted just before Washington and Beijing were set to hold high-level trade negotiations, which raised hopes that the two sides will come up with an agreement to reduce the impact on the global economy.

After the trade talks, the U.S. and China reached the first stage of a trade deal under which tariffs on US$250 billion-worth of Chinese imports imposed by the U.S. -- which had previously been set to rise from 25 percent to 30 percent Oct. 15 -- would not go into effect, while Beijing has agreed to purchase US$40 billion to US$50 billion-worth of agricultural products from U.S. farmers.

In addition, economic data released by the National Development Council (NDC) showed that the coincident indicator, which gauges the current economic situation, rose 0.57 percent for August from a month earlier, while the leading indicators moved down for the second straight month and the composite index of monitoring indicators pointed to a sluggish economy.

The NDC is scheduled to release the September data next week.

The increase in confidence was also reflected in a rise in the optimism index for the job market over the next six months, which rose from minus 31.9 in September to minus 26.4 in October, according to the survey results.

The optimism index for the purchase of big ticket items such as cars and homes rose to a positive 4.8 in October from minus 0.1 in September, while the index for durable goods purchases also grew from minus 17.4 to minus 14.0, the survey showed.

The stronger sentiment toward the economy lifted investor faith in equity prices, with the optimism index for the local stock market up from minus 16.3 in September to minus 9.7 in October, Cathay Financial said.

The index gauging investors' appetite for risk in their investments also moved higher, up to minus 1.8 in October from minus 5.7 in September.

Respondents to Cathay Financial's October survey pegged Taiwan's 2019 economic growth at 2.3 percent on average, compared with a 2.2 percent increase expected in a similar poll in September.

The expectation, however, was still shy of the government's forecast of 2.46 percent made in August, while 78.4 percent of the respondents said local economic growth will hit at least 2 percent this year.

The survey collected 17,243 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.