Mon, Jan 29, 2024 page12

• Economy has bottomed out, NDC indicators show

  YELLOW-BLUE: While retail and wholesale performance lagged and finance-related indicators remained steady, a strong export momentum is expected, the council said

  • By Chen Cheng-hui / Staff reporter
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  The composite index of monitoring indicators compiled by the National Development Council (NDC) last month totaled 20 points, unchanged from the previous month and flashing “yellow-blue” for the second consecutive month, indicating that the economy has bottomed out as external demand continued to gain steam despite weakness in domestic trade, the council said on Friday.

  Concurrently, the index of leading indicators, which gauges the economy’s direction in the following six months, rose for a third consecutive month and the index of coincident indicators, which tracks the current pace of economic activity, increased for the ninth consecutive month, the council said in a report.

  The council gauges economic health levels and signals them using a five-color index, with “blue” signaling recession, “green” suggesting steady growth and “red” indicating overheating. Dual colors mean economic health levels are in transition.

  

  People browse goods ahead of the Lunar New Year holiday in a supermarket in Kaohsiung’s Cianjhen District on Friday.

  Photo: CNA

  “Benefiting from rising business opportunities related to the applications of emerging technologies, export performance turned strong last month compared with the previous month,” the council said.

  “However, due to a weak global end-market and firms being relatively late in stocking up inventory before the Lunar New Year holiday, the performance of the wholesale, retail and food-and-beverage sectors shifted into lower gear last month.”

  Among the index’s nine components, the sub-index on customs-cleared exports score increased by 2 points and flashed “red,” compared with “green” the previous month, but the sub-index gauging sales of trade and food services saw its score decrease by 2 points with a “blue” light, downgrading from “green” a month ago, the council’s data showed.

  There were no changes in the light signals of the other seven components, including money supply, the TAIEX, non-agricultural employment, industrial production, manufacturing sales and imports of capital equipment, the report said.

  Looking ahead, the council expects export momentum to remain strong on the recovery of global trade and predicts domestic investment would continue gathering steam thanks to demand for advanced semiconductor technologies, net zero carbon emissions and digital transformation.

  Meanwhile, private consumption is expected to remain healthy on the back of stable employment, rising minimum wages, higher income tax deductions and a stock market boom, it said.

  However, close observation is warranted on the impacts on the global economy from major central banks’ monetary policy changes, as well as geopolitical risks such as the US-China rivalry, the Russia-Ukraine war, the Israel-Hamas conflict and the attacks on cargo ships in the Red Sea, the council said.

  Last month, the leading indicators index increased by 0.45 percent month-on-month to 100.04. The index has risen for the third consecutive month with the pace of growth accelerating sequentially, indicating that the economy is expected to continue gaining momentum.

  At the same time, the index of coincident indicators increased by 0.58 percent to 100.97, rising for the ninth straight month as firms’ inventory depletion gradually comes to an end amid recovering export growth, manufacturing output and electricity consumption, the report said.
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