Ifo sees Taiwan’s economy improving in 2016

2015/11/16

Taiwan’s economy is expected to pick up steam in the first half of next year on the back of an improving macro-environment, according to the latest World Economic Survey released Nov. 12.

In the report, Munich-based Institute for Economic Research (Ifo) rated Taiwan’s capital expenditure, overall economy and private consumption as “bad” in the fourth quarter of 2015, giving the country a less than satisfactory overall assessment.

During the same period, the global economic performance index dropped 6.3 points to 89.6, slightly below its long-term average, Ifo said, adding that the world economy is facing continuing uncertainty in the first half of 2016.

“Assessments of the current economic situation deteriorated only marginally, but expectations are far less positive than last quarter,” the think tank said. “The most urgent economic problems are insufficient demand and a lack of confidence in government policies. The world economy is seeing only moderate growth.”

The weakening of the economic climate in Europe, Latin America and North America is largely due to a less than positive outlook, according to the report. Meanwhile, both the economic situation and unfavorable projections caused the deterioration in Africa, Asia and the Middle East.

Despite this general pessimistic outlook, Ifo predicts Taiwan’s consumer prices will strengthen while exports, interest rates and the stock market will remain stable in the first two quarters of next year. Economic experts surveyed in the report also expect the country’s capital expenditure and private consumption growth to maintain momentum.

In response to the findings, the National Development Council said Taiwan’s weak ratings in 4Q were caused by seasonal fluctuations of exports and a contraction in the Purchasing Managers’ Index in October.

“Given the continued growth in the local semiconductor sector and the implementation of the Cabinet’s economic stimulus package, Taiwan’s overall outlook remains upbeat in the long run, with a steady and significant improvement projected for the first half of 2016,” an NDC official said.

The latest Ifo survey was based on responses from 1,040 experts in 113 countries, with the NDC acting as the coordinating body in Taiwan.

Source: Taiwan Today (http://taiwantoday.tw/ct.asp?xItem=238844&ctNode=2194&mp=9)