The government’s business climate monitor last month flashed “yellow-red” for the second straight month as robust artificial intelligence (AI) demand from abroad continued to bolster industrial output and machinery imports, the National Development Council (NDC) said yesterday.
The monitor’s score stayed unchanged at 35, indicating that the nation’s economy is maintaining momentum, due to rising exports, industrial production and imports of electrical and machinery equipment, it said.
The council uses a five-color spectrum to indicate the nation’s economic health, with “red” suggesting a boom, “green” indicating steady growth and “blue” signifying recession. Dual colors mean the economy is transitioning to a stronger or worse state.
Photo: CNA
“The recovery appears less imbalanced with more sectors coming out of the woods,” council research director Wu Ming-huei (吳明蕙) told a media briefing in Taipei.
Taiwan’s export-oriented economy has benefited from strong demand for AI investment by US technology giants, Wu said.
Firms in the global AI supply chain appeared sturdy, while non-tech firms gradually emerged from inventory adjustments, the official said.
However, manufacturers of chemical, plastic and steel products remained affected by sharp competition from Chinese rivals and Beijing’s termination of favorable tax terms under the Economic Cooperation Framework Agreement, Wu said.
“There is little the Taiwanese government can do on this issue, which carries more political than economic implications,” the official said.
The index of leading indicators, which seeks to project the economic landscape in the next six months, increased 0.87 percent from one month earlier to 103.4, rising for the eighth month in a row, the council said.
All seven component measures displayed upward cyclical movements, consistent with Taiwan’s economic improvement, it added.
The index of coincident indicators, which reflects the current economic situation, increased 1.16 percent to 104.1, rising for the 14th consecutive month, the council said.
Almost all of the seven sub-indices gained points except the reading on the value of exports which weakened slightly from one month earlier.
The council is positive about the economic outlook, as local tech firms maintain leading positions in chipmaking and would show stronger interest in capacity expansion to meet customer needs, the council said.
However, Wu said firms should remain wary about monetary policy by major central banks and volatile geopolitical relationships, as the two factors would affect global trade and therefore, Taiwan’s exports.
In a related development, the consumer confidence index this month was 72.69, rising by an insignificant 0.49 point from last month, indicating a neutral assessment, a survey by National Central University (NCU) showed yesterday.
Of the six components in the index, the confidence reading on stock investment bucked the uptrend and shed 0.97 points to 58.38, as profit-taking pressure built up after the TAIEX rallied to new highs repeatedly, it said.
Dachrahn Wu (吳大任), director of NCU’s Research Center for Taiwan Economic Development, which conducted the survey, said that investors should be cautious, as the US economy, which is the primary end-market for consumer electronic gadgets, might be losing momentum given lackluster consumer spending.
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