Economy flashes third straight 'yellow-blue'

The overall monitor has flashed “yellow-blue” since September, suggesting the nation is currently still making the transition from a sluggish to stable economy, the CEPD said.

International research institute Global Insight said it expects Taiwan's economic environment to put in a positive performance next year. It also forecast a slight increase in economic growth compared to 2012.

The CEPD warned, however, that the U.S. fiscal cliff and eurozone crisis mean the international market is likely to continue fluctuating, which will hurt demand for Taiwan exports.

Domestic, Export Market Performance

Despite the government not seeing fit to raise the fixed monthly salary, the stock market's weak performance and declining domestic consumption, the CEPD said that overall local enterprises remain optimistic about future business conditions.

However the council said that some market variables may be causing an unfavorable economic environment and weak fourth-quarter growth, something that may be felt particularly hard among exporters.

Only one of the CEPD's four indicator signs saw a decrease from October, with the three others all reporting slight increases.

The November monitoring indicators amounted to 20 points in total, flashing the “yellow-blue” signal for the third consecutive month. The monitoring indicators take into account nine components to represent the overall national business climate.

The CEPD said that among the nine components, manufacturing sales gained one point and changed its sector's signal from “blue” to “yellow-blue.” The signals for the rest of the components remained the same as last month.

The nation's November business climate suggests that the economy is gradually picking up from its past sluggish performance, the council said, but warned that economic activity remains relatively weak.

In the past half-year, the annualized six-month rate of change of leading indicators increased by 0.6 points, a 0.8-percent rise from October.

A rise of 0.4 percent in the overall coincident indictor may signal growth in the wholesale, retail and food sectors; customs-cleared exports; shipments by manufacturers; and industrial production.

However the CEPD said that machinery and electrical equipment imports, electric power consumption and nonagricultural employment all had negative performances.

The council noted that loans and investments by financial institutions saw very positive movement from the previous month. Meanwhile there was some disappointing results in areas such as the sales ratio for manufacturing, regular employee payroll numbers, and the manufacturing unit output labor cost index.

Government agencies should continue promoting the Cabinet's Economic Power-up Plan, the council concluded, saying it may continue to help to expand economic growth in the upcoming year.

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