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June 23, 2017

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Economy remains in stable condition for 2nd straight month

TAIPEI, Taiwan -- The economic monitoring indicator flashed the "green" signal in March, representing a stable economy, according to a report released by the National Development Council (NDC, 國發會) yesterday.

According to the NDC, the economic monitoring score in March registered at 25, which was the same as the previous month. March marked the second consecutive month in which the economic monitoring indicator flashed the "green" signal.

While leading indicators are on an upward trajectory, coincident indicators stay level, showing that the local economy is now "stabilized," but with latent risks, the NDC said. The leading indicator index in March was pegged at 104.49, up 0.22 percent from February. The coincident indicator index was pegged at 103.7, up 0.08 percent from the previous month.

According to the NDC's report, developed countries are likely to have better-than-expected GDP growth this year, which is likely to benefit Taiwan's exports. Emerging economies, on the other hand, have exhibited rather sluggish economic activity, which may hurt Taiwan's exports. All in all, the local economy is on track for recovery, the NDC said optimistically.

Optimism in Coming Months

Among the nine components that make up the economic monitoring score, the imports of machinery and electrical components gained two points from the previous month; the signal of which moved from "yellow-blue" to "yellow-red," representing a transition from stable to booming. The light signals of the industrial production and the customs-cleared exports moved down one point and the signal changed from "green" to "yellow-blue." Light signals for the rest of the components remained unchanged for the month.

"The economies of western nations are strong economies, while they are weak in Asian nations," the NDC said. Domestically, the coming Mother's Day and computer trade shows are expected to drive consumption in the next couple of months, the NDC said.

In addition, the government has hastened its pace to realize the Free Economic Pilot Zones, which aim to facilitate the opening up of the market as well as the relaxation of regulations. The new measures are likely to establish a better business-friendly environment, which in turn will attract more business investments, the NDC said.

Lagging Indicators

According to the report, with revised data, the lagging index stood at 100.46, down by 0.15 percent from February 2014. Its trend-adjusted index decreased by 0.27 percent to 97.26. Among the six indicators making up the trend-adjusted index, the unemployment rate (inverted) had positive cyclical movement from the previous month, while the manufacturing unit output labor cost index, loans and investments of monetary financial institutions, the inventories to sales ratio for manufacturing, the interbank overnight call-loan rate and regular employees on payrolls in industry and services had negative cyclical movements.

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