Local economy remains stable but leading indicators down

02/28/2020 07:55 PM
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Taipei, Feb. 28 (CNA) Taiwan's economy flashed a "green light" for the third consecutive month in January, although an index gauging the economic climate fell from a month earlier amid concerns over the spread of the novel coronavirus (COVID-19) originally from the Chinese city of Wuhan, according to the National Development Council (NDC).

However, the country's leading indicators fell from January, marking the second consecutive month of decline, the NDC said.

The composite index of monitoring indicators, which reflect the existing economic situation, remained in the green light category after falling from 27 points in December to 25 in January, according to data compiled by the NDC, Taiwan's top economic planning agency.

Despite the fall, the latest score is still in the green light range of 23-31 points.

The NDC uses a five-color system to gauge the country's economic performance, with blue indicating economic recession, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy and red pointing to overheating.

Of the nine factors in the NDC's composite index, the sub-index for sales generated by the retail, wholesale and food/beverage industries flashed a blue light in January, down from a green light in December.

The sub-indexes on merchandise exports and business sentiment among manufacturers continued to flash a yellow-blue light in January, according to the NDC.

The NDC said the sub-index on imports of machinery and electrical equipment flashed a yellow-red light in January, compared with a red light a month earlier, while the sub-index on industrial production flashed a yellow-red light, improving from a green light a month earlier.

In January, the sub-indexes on money supply and revenue posted by the manufacturing sector continued to flash a green light, while the sub-index on non-farm payrolls kept flashing a blue light in the month, the NDC said.

The sub-index on changes in stock prices in January continued to flash a red light, the NDC added.

The leading indicators, which predict economic performance over the next three to six months, fell 0.11 percent from a month earlier to 101.63 in January after a 0.08 percent fall in December, the NDC data showed.

Of the seven leading indicators, the sub-indexes on export orders, money supply and employment fell, while the sub-indexes on share prices, the floor area of new construction projects, imports of semiconductor production equipment, and business sentiment among manufacturers moved higher, the data indicated.

Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, said the spread of the Wuhan virus has created uncertainty over the global economy, adding consumer confidence is likely to weaken accordingly.

In addition, Wu said, the COVID-19 epidemic has also affected production due to lockdowns in a number of Chinese cities to contain the spread of the virus, which has interrupted the global supply chain.

So far, more than 83,000 confirmed cases have been reported worldwide, leaving over 2,800 people dead with the majority in China. Outside China, South Korea, a global high tech manufacturing hub, has reported a spike in confirmed cases to 2,337 as of 4 p.m.Friday, up 571 from a day earlier.

Wu said global demand is expected to be hurt by the epidemic, which in turn will damage the export-oriented economy in Taiwan.

In terms of domestic demand, Wu said, the local tourism industry is expected to be affected by the virus scare, while weakening consumer confidence is likely to drag down the revenue of local retailers such as department store chains.

Under such unfavorable circumstances, Wu said she was cautious about the NDC's data for February. However, as Taiwan has been doing relatively well at containing the virus spread, Wu said she expects foreign buyers will shift their orders to Taiwanese suppliers from the seriously infected China and South Korea.

As of Friday, Taiwan has reported 34 confirmed cases, up two from a day earlier, with one death.

(By Pan Tsu-yu and Frances Huang)

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