Taipei, June 26 (CNA) The local manufacturing and service sectors were less optimistic in May about their business prospects amid a spike in domestically transmitted COVID-19 cases, according to the Taiwan Institute of Economic Research (TIER).
The composite index for the manufacturing sector compiled by the TIER fell 1.28 from April to 105.24, its lowest level since November 2020, when the index stood at 103.11.
For the service sector, the composite index dropped by 2.24 from the previous month to 98.25 in May, marking the second consecutive month-on-month decline, the data showed.
Despite the outbreak of COVID-19 cases since mid-May, TIER President Chang Chien-yi (張建一) said the production of the export-oriented manufacturing sector has remained largely unscathed, buoyed by solid global demand.
But the virus has had a psychological impact on manufacturers, making them more cautious about their business prospects in the near future, Chang said.
Nonetheless, the TIER still expected Taiwan’s gross domestic product (GDP) growth to top 5 percent this year largely due to a strong export performance.
In April, TIER raised its forecast of Taiwan’s GDP growth for 2021 to 5.03 percent, an upward revision of 0.73 percentage points from its January forecast.
Service businesses were far more pessimistic than manufacturers because of the COVID-19 woes.
Under the government’s Level 3 alert imposed on May 19, on-site dining is not allowed and entertainment venues are closed to avoid mass gatherings, leading to restrictions in movement and limits in private consumption.
Chang said the food and beverage industry has fallen victim to the restrictions, expecting sales generated by the sector to fall 30 percent from a year earlier in June.
According to the Ministry of Economic Affairs, food and beverage revenue dropped 19.1 percent in May from a year earlier as fears over the virus spread hurt consumption.
Under such unfavorable circumstances, the survey conducted by the TIER found that restaurant and food stall owners largely became pessimistic about their business over the next six months.
Meanwhile, the composite index for the property industry fell 3.28 from a month earlier to 107.28 in May, marking the third straight month of a decline, TIER said.
The pandemic prompted home buyers to postpone their purchase plans, creating more uncertainty in the property market, which had already been affected by the government’s measures to rein in home price speculation, the TIER said.