Taiwan's economy continues steady growth, but at slower pace

07/27/2022 08:21 PM
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Shoppers in Taipei
Shoppers in Taipei's Xinyi business district. CNA file photo

Taipei, July 27 (CNA) Taiwan's overall economic monitoring indicator flashed green in June for the fourth consecutive month, indicating the continued steady growth of the domestic economy, but the index also fell to its lowest in nearly 21 months, according to the latest report released by the National Development Council (NDC) on Wednesday.

The composite index of monitoring indicators, which reflects the current economic situation, fell one point in June from a month earlier to 27, the lowest since October 2020, according to data from the NDC, Taiwan's top economic planning body.

Despite the drop in the composite index, the figure remained in the green light category ranging from 23-31, marking the fourth consecutive month with a green light, the NDC said.

Source: NDC
Source: NDC

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

Among the composite index's nine components, the sub-index for non-agricultural employment gained one point, changing from blue to yellow-blue.

● Unemployment up for 2nd straight month as graduates enter job market

Meanwhile, the sub-indexes for money supply and industrial production each lost one point, changing from yellow-red to green and from green to yellow-blue, respectively, the NDC data showed.

The indicators for the other six components that make up the composite index remained unchanged in June from a month earlier.

Following the impact of the Russia-Ukraine war, soaring worldwide inflation and tight monetary policies adopted by major countries, global economic growth has clearly slowed, impacting the stock market and business confidence, Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, told reporters.

As a result, the sub-indexes for industrial production, stock price changes and business sentiment among manufacturers in June also moved lower from a month earlier, indicating that businesses became more cautious about the future outlook, Wu said.

● Manufacturing activity stays in expansion mode but uncertainty rises

● Taiwan's industrial production growth slows in June

Financial markets are expected to be increasingly volatile over the next few months due to the aforementioned factors, she added.

However, Taiwan's exports remained strong in June due to solid demand for emerging technologies and applications as well as digital transition services, while sales and employment generated by the local retail, wholesale and food/beverage industry also moved up from a year earlier due to a drop in domestically transmitted COVID-19 cases, according to the NDC.

● Exports from Taiwan hit new quarterly high in April-June

● Taiwan sets new monthly high for export orders in June

In June, leading indicators which gauge the economic climate over the next six months also moved lower for the eighth consecutive month. In total, the indicators dropped by 5.58 percent during the period, the NDC data showed.

In addition, indicators which reflect the current state of the economy also fell for the fifth consecutive month, increasing the cumulative drop in the index over the past five months to 2.37 percent, according to the data.

● Food and beverage sales soar by over 60% year-on-year in June

The drops in the composite index, leading and coincident indicators show that economic expansion has slowed significantly, Wu said, but added "There is no reversal for the economy currently."

Asked whether an anticipated decline in demand from Europe and the United States in the second half of this year could hurt Taiwan's exports and change the overall economic monitoring indicator to yellow-blue, Wu agreed that multiple exterior factors impact Taiwan's foreign trade.

However, there is still a good chance the economy will continue to flash a green light in the second half of this year amid growing domestic investment and anticipated solid demand due to the improving COVID-19 situation in Taiwan, as well as the rollout of a domestic tourism stimulus package in July and the impact of summer vacations on consumption, she said.

(By Su Szu-yun and Evelyn Kao)


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