The government’s business climate monitor last month changed to “yellow-red” from “red” the previous month, as firms in old economy industries reported a lackluster export recovery, but the overall economy still maintains positive growth momentum, the National Development Council said yesterday.
The council measures the nation’s economic health using a five-color system, with “blue” signaling a recession, “green” suggesting steady growth and “red” indicating a boom. “Yellow-red” reflects a slight boom, while “yellow-blue” shows sluggishness.
The total score of the monitor’s composite index dropped five points from the previous month to 34, the lowest in the past six months, the council said in a report.
Photo: EPA-EFE
That came as the growth momentum among local industries was uneven, with the semiconductor and information technology industries continuing to benefit from an artificial intelligence (AI) boom, while traditional industries such as steel, petrochemicals, textiles and machinery still performed relatively weak, it said.
Among the composite index’s nine components, the readings on custom-cleared exports, and retail and wholesale trade turned from red to green, while the reading on the manufacturing sector’s business climate shifted from green to yellow-blue, the report said.
The remaining six readings — the M1B money supply, the TAIEX, the industrial production index, the average monthly overtime hours of industry and service employees, imports of machinery and electrical equipment, and the index of manufacturing sector sales — remained unchanged, it showed.
Meanwhile, the index of leading indicators, which gauges the economy’s direction in the next six months, rose 0.07 percent month-on-month to 103.35, rising for the 11th consecutive month, and the index of coincident indicators, which tracks the pace of economic activity, climbed 0.77 percent to 105.9, increasing for the 17th consecutive month, it said.
As both the leading and coincident indicators continue rising, the local economy has “undoubtedly” held on to its path of recovery, the council said.
The council said it expects exports to continue growing steadily, as AI-related exports would support domestic tech firms, coupled with restocking demand ahead of the year-end shopping sprees in Europe and the US.
It expects domestic investment to continue gathering speed thanks to the expansion of high-end production capacity by semiconductor firms, and the establishment of research bases and data centers by major global tech giants, as well as investments related to digital transformation and net zero carbon emissions, the council said.
Meanwhile, private consumption is expected to retain strong momentum on the back of stable wage hikes and government subsidies for housing and tax exemptions, it said.
However, the upcoming US presidential election, continued geopolitical risks and more trade barriers set by governments still pose uncertainties ahead, and their effects on Taiwan’s economy deserve close observation, it added.
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