Lukewarm domestic demand hits retail and restaurant industries

This article was published by the Taiwan Headlines on August 30, 2006. It reports that in the first half of 2006, Taiwan's retail and restaurant industries grew only a marginal 1.6 percent and 3.15 percent, respectively, when compared to the same period of 2005. This was far below the average 5-percent growth rate posted by these two industries over the past few years.

The Ministry of Economic Affairs attributed the slow industry growth rates mostly to Taiwan's credit-card turmoil, which was caused by huge unpaid credit debt since 2005. All major banks in Taiwan were hit by the debt and have tightened consumer credit. This has in turn badly hurt consumer sentiments.

According to the Ministry of Economic Affairs, the aforementioned growth rates in the first half of 2006 were the lowest since 2002. This suggests that domestic demand was badly weakened at a time when world market turned strong. The ministry further expects the growth rates of the two industries for the third quarter of 2006 to remain under 5 percent.

According to the Ministry of Economic Affairs, Taiwan's retail industry segment of automobile, motorbike and parts for both vehicles, as well as apparel segment, posted deepest recessions in the first half of 2006. Meanwhile, general grocery retail segment only reported a marginal 1.78-percent increase during this period, as a result of the 2.83-percent recession and 1.93-percent decline posted by department-store and super-market segments, respectively.

In sharp contrast to the two industries above, Taiwan's wholesales industry reported an amazing 10.19-percent growth in the first half of 2006. According to the Ministry of Economic Affairs, this increase might be attributed mostly to strong export. Specifically, the 31-percent export increase of precious metal and trinket segment was the major force behind the considerable growth of Taiwan's wholesales industry in the first half of 2006.

In total, Taiwan's wholesale, retail and restaurant industries had a combined revenue of NT$5.4 trillion (US$16.9 billion) in the first half of 2006, an increase of 7.41 percent from the previous year.