The government’s business climate monitor last month signaled “blue” for the fourth consecutive month, indicating a recession, as global inflation and monetary tightening continued to constrain exports and other key economic barometers, the National Development Council said yesterday.
The total score for the nine monitoring indicators shed 1 point to 10, the lowest in 14 years, which indicates that the economy is unlikely to improve in the first half of the year amid an ongoing global economic slowdown, council research director Wu Ming-huei (吳明蕙) said.
“Poor exports are to blame,” Wu told a news conference in Taipei.
Photo: AFP
The outlook for exports, which accounts for 60 percent of GDP, appears dim due to weak end-market demand in the US and Europe, she said.
Taiwan is home to the world’s largest contract makers of electronics used in smartphones, notebook computers, TVs, wearable electronics, vehicles, servers, and Internet of Things and artificial intelligence applications.
Slack demand would not only limit exports, but also negatively affect sales prices and industrial output, 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 a transition to a stronger or weaker state.
The monitor is likely to remain “blue” for a few more months, with a value of 10 expected for this month, Wu said.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) forecasts export contraction through the third quarter, meaning that the chances of a quick recovery are small, she said.
The index of leading indicators, which seeks to project the economic situation in the coming six months, grew 1.17 percent to 100.95, rising for the fourth straight month on the back of better export orders, business confidence, construction floor areas, stock closing prices and labor accession rates, the council said.
However, the readings on money supply and imports of semiconductor equipment continued to display negative cyclical movements, it said.
The index of coincident indicators, which aims to measure the current economic situation, fell another 1.92 percent to 90.13, dragged by listless exports, industrial output, commercial sales and electricity usage, it said.
Improvement in the coincident index series is necessary for the council to judge whether the economy has bottomed out and is starting to recover, Wu said.
Leading indicators mainly reflect better business expectations on the part of corporations, while coincident data indicate solid economic upturns, she said.
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