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May 30, 2017

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Local economy slows down in April: TIER report

TAIPEI, Taiwan -- The performance of Taiwan's manufacturing and service sectors dipped slightly in April, while the construction sector experienced an even larger drop, according to a report released by the Taiwan Institute of Economic Research (TIER) yesterday.

The manufacturing sector's economic index dipped 0.3 points to 101.81. The dip is not substantial, and does not constitute a real concern, the TIER said, adding that the sector's performance can be described as "level."

The service sector's economic index dipped 1.92 points to 98.93, which marked the first decline for the year. The TIER attributed the decline to subpar performance in the stock market. While capital influx once resulted in a stock index exceeding 9,000 points, there was also more selling by investors in order to pocket the profits. The stock index dropped 57.84 points in April, which was equivalent to a 0.65-percent dip, the TIER said, adding that average daily trade volume also dropped.

Real Estate Industry Slowed

The construction sector dropped 6.32 points to 89.35, which marked the fourth consecutive month of decline, and the score was also at the lowest level since February 2012. According to TIER researcher Liu Pei-chen (劉佩真), both the construction and real estate industries declined in April. While the construction sector was impacted by slow progress in engineering projects, the real estate industry was affected by the government's policies to suppress the housing market. As a result, buyers in the housing market maintained a wait-and-see stance.

The TIER forecast more capital to flow into the housing market in the latter half of the year and housing prices not coming down until next year.

All in all, economic figures in April are not bad, the TIER said, adding that both exports and foreign orders grew in the month, which in turn aided domestic consumption and an upbeat labor market.

Global Economy Loses Momentum

While the U.S. economy is steadily recovering, the eurozone is losing its recovery stamina. In Asia, while China's investment and exports slowed, Japan's economy was also bugged down by the implementation of a consumption tax and slower trade. Political turmoil in Thailand has also hurt trade volume, investment activities and consumption across Southeast Asian nations.

The global economy has been affected by weak performances in Asian countries. International research institutes recently adjusted downward their forecast of China's GDP growth in 2014 to between 7.3 and 7.4 percent. The figure was lower than the Chinese government's official forecast, which may constitute a concern, since mainland China is Taiwan's largest export marke, and its performance is likely to affect Taiwan's economy, the TIER said.

Firms Became Less Upbeat

According to TIER's survey, 29.6 percent of manufacturing firms feel the economy was "good" in April, down 28.4 percentage points from the previous month. About 17 percent of firms feel the economy was "bad" in April, up 7.3 percentage points from the previous month.

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