The government’s business climate monitor last month flashed “yellow-blue,” indicating the nation’s economy is emerging from a slowdown, after exports increased, the National Development Council (NDC) said yesterday.
The climate monitor gained four points to 20, the highest in 12 months, backed by advances in exports, as well as increases in wholesale, retail and restaurant sales, the council said.
“Exports last month staged an evident increase, lending support to trade-oriented wholesale revenue,” council research director Wu Ming-huei (吳明蕙) said, adding that the uptick had a favorable spillover effect on retail and restaurant business.
Photo: CNA
The latest climate monitor reading indicated that the economy has returned to a recovery course that would allow it gain a firmer footing after local exporters rode out lingering inventory adjustments, Wu said.
The council uses a five-color system to depict the nation’s economic health, with “green” signifying steady growth, “red” suggesting a boom and “blue” reflecting a recession. Dual colors suggest a transition to a stronger or weaker state.
The recovery is fraught with downside risks, such as an economic slowdown in the US and China as well as escalating geopolitical tensions, Wu said.
For example, Houthi militants have ramped up drone and missile attacks on ships transiting through the Red Sea, reviving worries over supply disruptions, she said.
That explained why local manufacturers last month turned slightly conservative about their business outlook, even though major technology firms reported better order visibility on the back of broadening artificial intelligence applications, she said.
The index of leading indicators, which aims to forecast economic conditions six months ahead, shed 0.32 percent to 98.31 last month, easing from a 0.71 percent decline in October, a further sign that the economy is turning around, Wu said.
While rallies on the local stock market and positive export order data suggest that a recovery is under way, other gauges in the index — such as imports of semiconductor equipment, construction floor space and labor accession rates — left something to be desired, she said.
The index of coincident indicators, which reflects the current economic situation, grew 0.77 percent to 100.67, as exports, industrial output, manufacturing sales and nonfarm payroll all gained value, the council said.
The reading of electricity utilization is the only coincident component that remained in the contraction zone, it said.
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