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May 29, 2017

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Taiwan manufacturing, service sectors grow in Jan.

TAIPEI, Taiwan -- As Taiwan catches the growth momentum of Western countries, the economic outlook index for Taiwan's manufacturing and service industries grew in January for the second consecutive month, according to a report released by the Taiwan Institute of Economic Research (TIER, 台經院) yesterday.

TIER summarized the current economy as "strong America and Europe and weak Asia." While some people expect interest rates in the U.S. to rise, which may take a toll on the economy, and because of the severe weather conditions in the U.S., the market in general is still optimistic about the U.S. economy's performance in the future, TIER said, adding that the eurozone is also on track toward an economic recovery.

After rolling out fiscal measures to stimulate the economy, Japan now stands at a critical stage to restructure its economy. The mainland Chinese government is also aiming to make adjustments to its economic structure, TIER said. Southeast Asian economies, on the other hand, are showing rather slow improvement.

Firms Optimistic about the Future

The market in general expects better economic performance in 2014, and this has been reflected in domestic firms' good performance. Both manufacturing and service sectors improved in January, TIER said.

According to TIER's survey, 25 percent of firms felt the economy was good in January, down 1.1 percent from December of last year, and 25.2 percent of firms felt the economy was bad, up 1.4 percent from the previous month. Businesses in the textile and leather industries are especially pessimistic. As the winter season nears its end, demand for textiles and leather are likely to decrease, resulting in the industries' decline.

Firms are more optimistic about the economy in the near future, however. Nearly 48 percent of the surveyed firms have a positive outlook about the economy in the next six months, up 10 percent from the pervious month, while 9.6 percent of firms held a pessimistic outlook, down 2.2 percent from the previous month.

The manufacturing sector's six-month economic outlook index climbed 2.65 points to 101.41 in January. It is the second consecutive month of growth. For the service sector, the six-month outlook index climbed 1.87 points to 95.97. It was also the second consecutive month of growth. Securities and telecommunication industries were especially optimistic.

Real Estate Industry Slows

The real estate industry, however, did not fare well in January and TIER held a rather "cautiously optimistic" outlook of its future performance. The construction sector's outlook index dropped 3.11 points to 96.38, ending three months of consecutive growth.

A number of construction projects drew to an end in January, causing a decline in the construction sector, TIER said, adding that the land value incremental tax also took a toll on real estate transactions.

The government is set to begin more construction projects this year. The electrical and mechanical service sectors are also expected to rake in more business this year. These are factors that will help the construction industry grow later this year, TIER said.

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