CAUTIOUS:
Official forecasts and household expectations diverge as the benefits of AI-led expansion have yet to translate into consumer confidence, a survey showed
By Crystal Hsu / Staff reporter
Taiwanese consumers grew more cautious about the economic outlook and spending this month despite the economy’s strongest growth prospects in decades, with inflation concerns and financial-market volatility weighing on sentiment, a survey released yesterday by Cathay Financial Holding Co (國泰金控) showed.
Consumer sentiment toward the local stock market and overall risk appetite fell after swings in equities last month, the survey showed.
Heightened tensions between the US and Iran, oil price gains and expectations for higher US interest rates had made investors more cautious, Cathay Financial said.
Photo: RITCHIE B. TONGO, EPA
Frequent stock trading halts in South Korea and renewed concerns about the sustainability of the artificial intelligence (AI) boom fueled market volatility, with the index measuring optimism toward Taiwanese stocks falling to 36.2 and the risk-appetite index declining to 29.1, it said.
Respondents expected inflation to average 2.3 percent this year, higher than the government’s estimate of 2.07 percent and above the central bank’s 2 percent inflation target, the survey showed.
Consumers were also less optimistic about economic growth. They expected the economy to expand 8.94 percent this year on average, well below the government’s latest forecast of 11.05 percent — the fastest pace in nearly four decades, while only about one-quarter expected growth to exceed 10 percent.
The divergence between official forecasts and household expectations suggests that the benefits of Taiwan’s AI-led expansion have yet to translate into equally strong consumer confidence, as higher energy costs, inflation risks and financial-market swings add to uncertainty, Cathay Financial said.
As a result, willingness to make major purchases weakened, with the index for durable-goods spending falling into negative territory, the survey showed.
Taiwanese equities nevertheless remained the most favored investment target over the next six months, with 57 percent of respondents selecting local equities, compared with 24 percent who favored US stocks, it found.
Among respondents planning to increase investments, the most commonly cited reason was confidence in Taiwanese companies’ ability to sustain earnings, followed by optimism about the strength of the economy, the survey said.
The survey was conducted from Aug. 1 to Aug. 7 and gathered 12,580 responses from customers and members of Cathay Life Insurance Co (國泰人壽) and Cathay United Bank Co (國泰世華銀行).