Taiwan’s economy in September signaled sluggish growth for the first time in more than two years due mainly to a rise in global economic uncertainty, the National Development Council (NDC) said Thursday.
NDC data showed that the composite index of monitoring indicators, which reflects the current economic situation, fell by six points from a month earlier to 17 in September, flashing a “yellow-blue” light signaling sluggish growth.
This was the lowest monthly level in three and a half years, and only one point higher than the blue light category of 9-16 points.
The NDC uses a five-color system to gauge the country’s economic performance, with blue indicating economic contraction, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy, and red pointing to an overheated or booming economy.
The composite index flashed a “green” light in August, which was the sixth month in a row it had indicated stable growth.
The leading indicators, which assess the economic climate over the next six months, also fell in September for the 11th consecutive month, with the cumulative drop in the index over the past 11 months rising to 7.59 percent, said the NDC, the top economic planning agency in Taiwan.
In addition, indicators which reflect the current state of the economy also fell for the seventh consecutive month, increasing the cumulative fall in the index over the past seven months to 8.2 percent, according to the data.
Impact of global economic uncertainty
The drops in the composite index, and leading and coincident indicators were mainly due to huge global economic challenges affecting the country, including rising inflationary pressures, tightening monetary policies adopted by central banks in many countries that caused turbulence in financial markets and affected demand, as well as geopolitical risks, said Wu Ming-hui (吳明蕙), head of the NDC’s Department of Economic Development.
In addition, the International Monetary Fund’s cutting of economic growth forecasts for major countries and inventory adjustments by many manufacturers may have an impact on the economy, Wu added.
Looking forward to the future, the NDC stated that the continuing demand for emerging apps and digital transformation and the year-end holiday shopping season in Europe and the United States are expected to bolster exports.
Domestically, increasing investment in the semiconductor supply chain and green energy industry and the gradual relaxation of border controls will help boost the economy.
Geopolitical situations
However, the rising pressure of global inflation and continuous interest rate hikes, and the ongoing war between Russia and Ukraine, coupled with China’s adherence to a zero-COVID policy, has deepened the downside risks for the global economy, according to the NDC.
Commenting on the NDC data at an economic forum, Cathay United Bank chief economist Lin Chi-chao (林啟超) said that there were two major challenges facing Taiwan’s economy: sluggish global demand and inventory adjustments that caused exports and investment to fall, and the weak performance of Taiwan’s stock market which affected economic growth momentum.
“In the next three to six months, the slowdown in the economy will be very obvious,” Lin added.

Source: Focus Taiwan News Channel