Taiwan economy in stable growth mode but index falls to 2-year low

09/27/2022 09:11 PM
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CNA file photo
CNA file photo

Taipei, Sept. 27 (CNA) Taiwan's economy remained stable in August, but the index gauging the economic conditions dropped to the lowest in more than two years, due mainly to shrinking global demand, the National Development Council (NDC) said Tuesday.

The leading indicators, which assess the economic climate over the next six months, also fell in August, indicating a cautious economic outlook, said the NDC, the top economic planning agency in Taiwan.

NDC data showed that the composite index of monitoring indicators, which reflects the current economic situation, fell one point from a month earlier to 23 in August, flashing a "green" light for six months in a row.

The index dipped in August to the lowest level since July 2020, hovering at the lower end of the green light category of 23-31 points.

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.

Chiu Chiu-ying (邱秋瑩), deputy director of the NDC's Department of Economic Development, said Taiwan's outbound sales have been affected by weakening global demand, amid rising inflation and aggressive interest rate hikes by the world's major central banks.

Among the nine factors of the composite index, the sub-index for merchandise exports from Taiwan fell one point in August from a month earlier, retreating from a red light in July to flash yellow-red, the NDC said.

The sub-index for the sales generated by retailers, wholesale businesses and the food/beverage industry also fell one point, flashing a yellow-red light, after a red indicator in July, the NDC said, adding that the wholesale industry was also affected by weaker global demand.

Bucking the downturn, the sub-index for stock prices rose one point in August from a month earlier to flash a yellow-blue light, after flashing blue in July, thus offsetting the weakness of the index as a whole, the NDC said.

The sub-indexes for other factors such as money supply, industrial production, non-farm payrolls and business sentiment among manufacturers all stayed unchanged in August, the data showed.

The leading indicators, however, fell 0.94 percent from a month earlier, marking the 10th consecutive month of a decline, the NDC said.

Over the 10-month period, the accumulated fall in the indicators was 7.05 percent, but the monthly decline in August was more moderate than the drops of 1.11 percent and 1.03 percent in June and July, respectively, Chiu said.

Of the seven factors in the leading indicators, only the sub-indexes for employment and imports of semiconductor equipment rose in August, the NDC data showed.

Chiu did not give a forecast for the movement of the composite index in September, saying only that the domestic economy has been facing challenges resulting from interest rate hikes amid rising inflation and the Russia-Ukraine war.

The silver lining, however, is that Taiwan is expected to benefit from its development of emerging technologies such as automotive electronics and high-performance computing devices, which will help cushion the impact of weaker global demand, Chiu said.

(By Pan Tzu-yu and Frances Huang)

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