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Economy sees three straight months of stability

TAIPEI, Taiwan -- The economic monitoring indicator in April flashed a “green” light, signaling a stable economy for the third consecutive month, according to a report released by the National Development Council (NDC) yesterday.

The economic monitoring score was pegged at 29, which was the highest figure in since May, 2011. Both leading index and coincident index grew in April, which was a strong testimony that the economy is on the track of a steady recovery, the NDC said.

Among nine components that make up the economic monitoring score, three flashed a “red” light, signaling a booming state of economy. They are stock market closing price, imports of machinery and electrical equipment, and manufacturing performance.

Optimism in the Future

According to the NDC's report, economic recovery in western nations is expected to drive Taiwan's exports. Also, the NDC is optimistic about the local economy.

The semiconductor industry is set to continue its investment in advanced manufacturing facilities, the NDC said, adding that telecommunications firms are hastening 4G network related construction. In addition, with the government's launch of Free Economic Pilot Zones, the NDC said there will be even fewer investment barriers down the road, and therefore it expects more investment activity.

The NDC also expects more domestic consumption in the remainder of the year. The stock market has had good performance recently, which aided in distributing wealth to the general public and consequently higher purchasing power. With the coming Duanwu Festival and mobile firms expected to roll out new devices in the near future, the NDC expects further growth in consumption.

In terms of risk factors, while the NDC forecast global recovery, it pointed out that the growth momentum in the eurozone is not as strong as expected. Japan's economic growth in 2014 is also a concern, as the forecast is not particularly good compared with the figure in 2013. Last but not least, the economic recovery in mainland China is relatively slow, which may impact Taiwan's exports, the NDC cautioned.

Taiwan May See 3% GDP Growth

According to the report, economic Indicators for finance, production, trade and consumption sectors all showed stability. The market was generally optimistic and there was also improvement in the labor market. All in all, the NDC said it is “cautiously optimistic” about the future economy.

With the economies on track for recovery in western nations, SinoPac Holdings (永豐金控) Chief Economist Jack Huang (黃蔭基) said Taiwan's exports will benefit as a result. If the economies continue to grow in western nations, the economic indicator may flash the “yellow-red” signal — representing an economy transitioning from stable to booming — at some point in the second half of the year, Huang said, adding that Taiwan may see 3-percent growth in GDP in 2014, which is higher than the 2.98 percent forecast released by the Directorate-General of Budget, Accounting and Statistics last Friday.

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