Local economy flashes 'green light' in April, but index falls

05/27/2022 08:30 PM
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Only a handful of customers have lunch in a food court in New Taipei on Tuesday, as people in Taiwan avoid dining out due to the spread of COVID-19. CNA photo May 24, 2022
Only a handful of customers have lunch in a food court in New Taipei on Tuesday, as people in Taiwan avoid dining out due to the spread of COVID-19. CNA photo May 24, 2022

Taipei, May 27 (CNA) Taiwan's economy continued to flash a "green light" in April, indicating stable growth, but an index measuring the economic climate fell to its lowest in more than 18 months, the National Development Council (NDC) said Friday.

In addition, leading indicators which gauge the economic climate over the next six months also moved lower, indicating more caution about the future, the NDC said.

Data compiled by the NDC, the top economic planning body in Taiwan, showed the composite index of monitoring indicators, which reflects the current economic situation, fell three points in April from a month earlier to 28, the lowest since September 2020 when the index stood at 27.

Despite the fall in the index, the figure remained in the green light category ranging from 23-31, marking the second consecutive month of a green light, the NDC said.

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

Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, told reporters that the fall in the April composite index largely reflected a fall in private consumption in the month with an increase in domestically transmitted COVID-19 cases pushing down the factor -- sales generated by the local retail, wholesale and food/beverage industry -- by two points from a month earlier.

Amid worries over COVID-19, many consumers refrained from dining in restaurants, while online learning also cut demand on campus for catering services, Wu said.

Among the other eight factors in the composite index, the sub-indexes for stock price changes and business sentiment among manufacturers also moved lowered by one point each from a month earlier.

Bucking the downturn, the sub-index on industrial production rose 1 point from a month earlier in April, the NDC said.

As for leading indicators, the April figure fell 0.33 percent from a month earlier to 100.19, marking the sixth consecutive monthly decline as six out of the seven factors that make up the indicators such as money supply, business sentiment among manufacturers, export orders and employment, moved lower in the month.

In six months the leading indicators have fallen 1.87 percent, according to Wu, who added that the scale of the drop was was not too burdensome.

Looking ahead, Wu said as the number of indigenous COVID-19 cases exploded in May, private consumption is likely to fall more, affecting the composite index of monitoring indicators in the month.

As for exports, at a time of an digital transformation worldwide, Taiwan still continues to benefit from solid global demand in May despite the rate hike cycle launched by the United States Federal Reserve and lockdowns in several industrial Chinese cities such as Shanghai, Kunshan and Suzhou, Wu said.

The impact from these external factors should be closely watched as the U.S. and China are the top two economies in the world and any negative leads from the two countries will send ripples across the globe, Wu said.

(By Su Ssu-yun and Frances Huang)

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