The government’s business climate monitor last month remained “yellow-red,” as imports of machinery equipment and manufacturing sales slackened somewhat, the National Development Council (NDC) said yesterday.
The overall score of all constituent readings shed two points to 34, showing that the nation’s economy remains vibrant, although the pace of growth lost some momentum, NDC research director Wu Ming-huei (吳明蕙) 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 shift to a stronger or weaker state.
Photo: CNA
“I am confident that Taiwan’s GDP growth should exceed 4 percent this year in light of robust exports, industrial production and manufacturing sales,” Wu told a media briefing.
“Green” and higher signals on the system suggest robust economic conditions, aided by active private investment, Wu said.
The official attributed the mild slowdown to uncertainty over regional geopolitical tensions, and soaring international energy and raw material prices, which are casting a shadow on the global economic landscape.
Worsening inflation has led global research bodies to trim their GDP growth forecasts for the US and Europe, Wu said, adding that rising crude oil prices would increase production costs, constrain corporate profits and affect the economy in Taiwan.
The index of leading indicators, which aims to portray the economic situation in the coming six months, shrank 0.64 percent from a month earlier to 100.65, as all seven constituents fell, the council said.
Wu said the trend is not a sign of economic downturn, but agreed that a slowdown is occurring, which she said needs to be closely monitored.
The council expects to pay particular attention to whether the war between Russia and Ukraine dampens Taiwan’s export orders, she said.
Commentators have downgraded the target prices of technology shares on concern that higher inflation could deter people from buying consumer electronics products.
The war’s effects could become more evident soon, beyond ongoing financial market swings and energy price hikes, Wu said.
The index of coincident indicators, which reflects the current economic state, expanded 0.32 percent to 102.99, as the indices for employment, industrial output and exports, as well as wholesale, retail and restaurant revenues picked up, the council said.
However, manufacturing sales and power consumption as well as imports of electrical and machinery equipment showed negative cyclical movements, it said.
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