The government’s business climate monitor was last month “red” for the fifth consecutive month, as the nation’s export-focused economy continued to boom, although service-oriented sectors and business confidence took a hit from a COVID-19 outbreak, the National Development Council (NDC) said yesterday.
The overall score shed 1 point to 40, while the leading and coincident indicators softened, the council said, adding that the situation is temporary and would not harm Taiwan’s economic fundamentals.
“The economic boom lost some steam last month because a level 3 alert wreaked havoc on sectors that rely on domestic demand and weighed on corporate sentiment,” NDC research director Wu Ming-huei (吳明蕙) told an online news conference.
Photo: CNA
The negative effects might taper off after the government yesterday eased anti-virus measures and they would disappear once the outbreak is brought under control, Wu said.
The council uses a five-color system to depict the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a transition.
STRONG ORDERS
The monitor might remain red this month and beyond in light of strong export orders and rosy business guidance by major firms, even though the low-base effect would vanish in the second half of the year, Wu said.
Local chipmakers and chip designers have raised revenue forecasts for this year on the back of insatiable global demand for new technology products and applications, as well as digital transformation.
Strong export orders would lend support to critical GDP components, such as industrial production, private investment and employment, Wu said.
The index of leading indicators, which aims to project the economic situation for the following six months, weakened 1.74 percent to 99.33, as the sub-indices on accession rates, construction floor area, imports of capital equipment and business confidence lost points, the council said.
The retreats were due to the virus outbreak and social distancing requirements, and might not leave irreparable scars, Wu said, adding that the government is mulling stimulus measures to encourage consumer activity.
The index of coincident indicators, which mirrors the current economic situation, shrank 0.57 percent to 103.04, due to falling nonfarm payrolls, commercial and retail sales, dining revenue, and electricity use, the council said.
The situation would improve once the nation emerges from the outbreak, Wu said, adding that the council would watch out for signals of a slowdown.
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