The business climate monitor in December signaled “blue” for a second straight month, as exports, industrial output and other economic indicators contracted, while consumer spending gained traction, the National Development Council said yesterday.
The total score of nine monitoring indicators was unchanged at 12, reflecting a recession induced by global inflation and monetary tightening, council research director Wu Ming-huei (吳明蕙) said.
“Foreign trade, a key growth driver, would remain weak in the coming months, but might come out of the woods earlier as global inflationary pressures have showed signs of stabilizing,” Wu said.
Photo: CNA
The sub-index on retail, wholesale and dining revenue gained 1 point in December, but imports of electrical and machinery equipment retreated by the same pace, Wu said.
The council uses a five-color system to portray the nation’s economic health, with “green” signifying steady growth, “red” suggesting a boom and “blue” reflecting a recession. Dual colors suggest transition to a stronger or weaker state.
Rising inflation and interest rate hikes led consumers around the world to cut spending on technology gadgets, prompting major tech titans to shed headcount and manage inventory cautiously, the official said.
This might persist through the first half of this year, but a few steelmakers and electronics suppliers are expecting a turnaround next quarter, encouraged by China’s reopening and swift easing of COVID-19 restrictions.
The index of leading indicators, which projects the economic situation in the coming six months, weakened in December for the 13th straight month, albeit at a milder pace, Wu said, adding that the chance of a rebound is unlikely until the third quarter.
The index has declined 8.1 percent in the past 13 months, council data showed.
The index of coincident indicators, which reflects the current economic situation, shrank 2.08 percent to 92.06, as almost all constituent measures lost value except for the sub-index on non-farm payroll, the council said.
Service providers catering to domestic demand saw a rapid recovery in December, as companies held year-end banquets for employees, Wu said.
The momentum is expected to carry on into this month, as companies organize spring gatherings to celebrate the new year, he said.
In addition, demand for electronics used in high-performance computing, electric vehicles and emerging technology applications should thrive, while inventory corrections linger for smartphones and notebook computers, the council said.
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