Amid sluggish global growth, key indicators for Taiwan’s export-oriented economy remained in contraction mode in January, flashing a “blue light” for a third straight month, the National Development Council (NDC) said Wednesday.
NDC data showed that the composite index of monitoring indicators, which reflects the current economic situation, fell by one point from a month earlier to 11 points in January, the lowest since May 2009. It continued to place the local economy in the blue-light range of 9-16 points, indicating contraction.
In November, Taiwan’s economy flashed its first blue light in four years, with the composite index of monitoring indicators falling to 12 points, down from 18 points a month earlier when it flashed a “yellow-blue” light.
The composite index stayed unchanged from a month earlier at 12 points in December.
The NDC, Taiwan’s top economic planning agency, uses a five-color system to gauge the country’s economic performance, according to nine indicators.
A blue light indicates a contracting economy, yellow-blue (17-22 points) represents sluggishness, green (23-31) signals stable growth, yellow-red (32-37) refers to a warming economy and red (38-45) points to an overheated economy.
Among the nine factors that made up the January composite index of monitoring indicators, the sub-index for customs-cleared exports increased by one point from a month earlier in January, flashing a yellow-blue light, improving from a blue light in December, according to the NDC.
However, M1B money supply and sales posted by the local wholesale, retail and food/beverage industries were both downgraded from “yellow-blue” in December to “blue.”
The six other variables measured in the January report were unchanged from December — TAIEX average closing price, industrial production index, non-agricultural employment, manufacturing sales index, imports of machinery and electrical equipment, and the TIER (Taiwan Institute of Economic Research) composite manufacturing composite index, according to NDC data.
Slowing global economic growth due to the impact of inflation and interest rate hikes has dragged down demand in end markets, causing indicators for Taiwan’s production, trade and finances to drop and dampening confidence in the local economy in January amid continued inventory adjustments by manufacturers, said Wu Ming-hui (???), head of the NDC’s Department of Economic Development.
However, domestic consumption continued to boom, and the turnover of retail and catering industries both increased compared with the same period last year, the NDC said.
Moreover, several factors in the January leading indicators such as export orders, business sentiment among manufacturers, and the manufacturing purchasing managers index (PMI) for business outlook over the next six months all rose, signaling that manufacturers have turned less pessimistic about the outlook, Wu said.
Overall, the trend-adjusted index of leading indicators which gauges the economic climate over the next six months moved up in January for the third consecutive month, according to the NDC.
However, the trend-adjusted coincident index fell for the 11th straight month in January, it said.
Looking ahead, Wu said that although business confidence last month picked up among manufacturers, there is still high uncertainty in the global economy as a result of multiple issues.
These include high bulk commodity prices and inflation driven by Russia’s invasion of Ukraine, she said, adding that Taiwan’s future economic performance could be affected as a result.
Source: Focus Taiwan News Channel