The government’s business climate monitor last month was “yellow-red” for the third straight month, with exports of tech and non-tech goods increasing, although other leading economic measures slowed, the National Development Council (NDC) said yesterday.
The monitor rose two points to 34 on the back of improved exports, industrial production and overtime hours, as local tech firms continued to benefit from an artificial intelligence (AI) craze, NDC Economic Department Director Chiu Chiu-ying (邱秋瑩) said.
The council uses a five-color system to depict the nation’s economic state, 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.
Photo: CNA
Taiwan’s GDP growth is expected to top 4 percent this year and would stay above 3 percent next year, helped by robust demand for AI electronics, warming private investment and resilient private consumption, the director said.
The government would lend support by facilitating construction at infrastructure projects to mitigate a slowdown in the housing market, Chiu said.
Private investment this year is tipped to be NT$5.3 trillion (US$161.98 billion) and is forecast to climb to NT$5.7 trillion next year — making it a key growth driver, just as exports are — as local tech firms expand capacity to meet business needs, she said.
Taiwan is home to the world’s top suppliers of AI chips and servers.
Hon Hai Precision Industry Co (鴻海精密) chairman Young Liu (劉揚偉) told a technology event that revenue from AI-linked business at his company next year would increase.
The index of leading indicators, which seeks to foretell the economic scene in the subsequent six months, shrank 0.38 percent to 101.58, as most of its components — namely manufacturing business confidence, new construction floor space, export orders and labor accession rates — displayed negative cyclical movements, the council said.
Only the reading on imports of semiconductor equipment moved upward, it said.
The coincident indicators, which mirror the economic situation, rose 0.22 percent to 104.66, with industrial output, manufacturing sales, exports and overtime hours gaining ground, the council said.
However, utility usage, as well as retail, wholesale and restaurant revenue weakened, it added.
In related developments, consumer confidence about the economy, stock investments and household income dropped, weighed by jitters over expected tariff hikes by the incoming administration of US president-elect Donald Trump, National Central University said.
The consumer confidence index this month fell 0.88 points to 74.61, the third consecutive month of decline, with all six component measures taking a hit, the university said.
The retreat came after Trump’s threats of tariff hikes on other nations raised uncertainty in financial markets and global trade, it said.
The scenario is unfavorable for Taiwan’s small and open economy, it added.
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