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Indicators show economy slumping for 6th consecutive month (update)

2012/05/28 21:18:26

Taipei, May 28 (CNA) Taiwan's economy remained mired in a slump in April for the sixth consecutive month, government monitoring indicators showed Monday, but the country's economic prospects are expected to improve gradually in coming quarters.

The Cabinet-level Council for Economic Planning and Development's composite index of monitoring indicators stood at 14 in April, the same as in the previous month.

The index covers a scale from 9 to 45, with values ranging from 9-16 representing a blue light, the index's lowest level indicating economic sluggishness and even recession.

April flashed a blue light for the sixth consecutive month, the longest blue-light period since the global financial crisis in late 2008 and 2009 battered Taiwan.

The council uses a five-color system to describe the state of the economy, with red indicating overheating, yellow-red reflecting fast-paced growth, green showing a stable economy, yellow-blue indicating an economic slowdown and blue reflecting a recession.

Hung Jui-bin, director-general of the council's Department of Economic Research, said that while the composite indicators showed the economy still has many downside risks, the pace of decline of some its components moderated in April.

The trend-adjusted index of coincident indicators, which reflect economic activity in the period measured, fell 0.1 percent to 95.9 in April, while the index of leading indicators, which gauge economic performance in three to six months, rose 0.6 percent from March to 131.4.

Hung pointed to the annualized six-month rate of change of the composite leading index, which rose 0.7 percentage points to 6.6 percent in April, indicating an improving economy.

Of the seven components making up the trend-adjusted index, the book-to-bill ratio of the semiconductor industry and the stock price index were the only two with positive cyclical movements compared with the previous month.

Hung believed that despite worries over the European debt crisis and slower economic growth in China, Taiwan's economic performance should improve, with the manufacturing sector picking up strength.

He also cautioned, however, that the recovery would not be as strong as previously expected.

"It would be nice enough if we can see a Nike-logo-shaped turn," Hung said, noting that a more robust "V-shaped" recovery was unlikely.

Weak global economic fundamentals led the government recently to lower its 2012 economic growth forecast for Taiwan from 3.38 percent to 3.03 percent.

(By James Lee)