Taipei, An escalation of trade friction between the United States and China has dampened the sentiment of Taiwan's manufacturing sector toward the business climate, according to the Taiwan Institute of Economic Research (TIER).
Citing the results of a survey, TIER, one of Taiwan's leading think tanks, said the August composite index for the manufacturing sector fell 3.30 points from a month earlier to 98.16, the lowest level since June 2017, when the index stood at 96.58.
TIER said that while the global economy remained on the path of expansion, rising trade tension between Washington and Beijing, the top two economies in the world, is likely to affect the pace of economic recovery.
In August, Washington imposed a 25 percent tariff on US$16 billion- worth of Chinese goods after a 25 percent duty on US$34 billion-worth of Chinese merchandise slapped in July.
In retaliation, China put a 25 percent tariff on US$16 billion-worth of U.S. goods in August, following a 25 percent duty on the same amount of exports from the U.S. a month earlier.
There were no signs that the trade dispute would be resolved anytime soon.
Under such unfavorable circumstances, many exports-oriented manufacturers in Taiwan have become cautious about their business outlook over the next six months amid fears that the trade dispute will compromise demand and hurt shipments, TIER said.
In addition, by taking into account a relatively high comparison base in the second half of last year, the local manufacturing sector held a cautious attitude toward export growth over the next six months, TIER added.
In addition, 21.8 percent of manufacturers polled in a TIER survey said the business climate improved in August, down from 25.0 percent in a similar poll in July, while 22.7 percent said the business climate deteriorated, up from 20.7 percent a month earlier, the think tank said.
Asked about the next six months, 15.0 percent of the respondents polled in the manufacturing sector in August said the business climate will improve, down from 22.8 percent in July, while 26.3 percent said the climate will decline, up from 16.4 percent in the July poll, according to TIER.
In terms of the local service sector, the composite index for August also fell 3.69 from a month earlier to 96.39, a new low since April, when the index hit 95.01, the survey found.
TIER said the fall in the service sector sentiment came after the local equity market was affected by concern over the escalating U.S.-China trade tension in the month, and the sector feared the trade dispute will send more ripples through the global financial markets.
Bucking the downturn, the sub-index for the local property sector rose 0.96 from a month earlier to 99.47 in August, TIER said.
Despite the increase, TIER said, the local property market remained in consolidation mode, but added that it was too early to say that the market has started to bounce back from its recent slump.
Source: Focus Taiwan News Channel