The government’s business climate monitor last month returned a second “yellow-red” signal, indicating that the nation’s export-oriented economy remained healthy, but is likely shifting gears, the National Development Council (NDC) said yesterday.
The monitor lost two points to 32, the brink of the “yellow-red” territory, dragged by industrial production weakness attributable to lackluster sales of metal products and poor demand for petrochemical products, the council said.
The council measures economic health using a five-color system, with blue signaling a recession, green suggesting steady growth and red indicating a boom. Dual colors of yellow-red and yellow-blue mean that the economy is changing gears to a better or worse state.
Photo: CNA
“We remain guardedly optimistic about the economy and will closely monitor any disrupting signs,” NDC Economic Department Director Chiu Chiu-ying (邱秋瑩) said, adding that the disappointing industrial output also had to do with two typhoons that disrupted shipments.
Local electronics suppliers continued to benefit from the artificial intelligence (AI) boom, while non-tech firms remained hit by a global slowdown induced by monetary tightening in the US and Europe, the official said.
The index of leading indicators, which seeks to foretell the economic scene in the next six months, declined 0.47 percent to 101.84, the council said.
The reading came after construction floor spaces, business confidence, labor accession and monetary supply displayed negative cyclical movements, it said.
The central bank’s selective credit controls introduced in September appeared effective in cooling the housing fever, it said.
In contrast, the gauges on imports of semiconductor equipment, export orders and local shares picked up to reflect healthy momentum, it said.
The coincident indicators, which mirror existing economic situations, held largely flat with a 0.004 percent decline to 104.1, the council said.
The measures on utility use as well as retail, wholesale and restaurant revenues weakened, but exports, overtime hours, manufacturing sales, and imports of machinery and electrical equipment gained value, it said.
Major global research bodies recently raised their forecast for the world’s GDP growth next year, favorable for global trade and Taiwan’s exports, the council said.
A stronger global economy would lend support to end-market demand for goods and services, it said.
Furthermore, major US technology giants have indicated they would spend more money on developing AI applications next year, a megatrend that would translate into active business growth for Taiwanese firms on the AI supply chain, it said.
However, Taiwan needs to watch out for uncertainty linked to geopolitical tensions, and US-China technology competition and trade disputes, it said.
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