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Taiwan's economy stays in contraction for 6th straight month in April

05/26/2023 08:32 PM
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A container truck travels through a container yard in the Port of Keelung in this illustration photo taken on May 22, 2023. CNA file photo
A container truck travels through a container yard in the Port of Keelung in this illustration photo taken on May 22, 2023. CNA file photo

Taipei, May 26 (CNA) Taiwan's economy remained in contraction mode for the sixth consecutive month in April as weakening global demand continued to weigh on the country's exports, the National Development Council (NDC) said Friday.

The NDC said its composite index of economic indicators remained unchanged in April at 11 but stayed in the "blue" range of 9-16 on the Cabinet-level council's five-tier system, 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.

Speaking with reporters, Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, said factors in the April composite index such as production, exports, money supply and business sentiment remained weak.

Domestic demand appeared relatively strong, with retail sales and revenue posted by the food and beverage industry growing in a stable manner, which offset the impact resulting from a fall in outbound sales, Wu said.

In April, Taiwan's exports and export orders both fell for an eighth consecutive month, falling 13.3 percent and 18.1 percent, respectively, from a year earlier amid inventory adjustments in both tech and old economy sectors.

Among the nine factors in the composite index, the subindex on nonfarm payrolls rose one point from a month earlier, while the subindex on business sentiment in the local manufacturing sector fell one point, the NDC said.

The subindexes on other seven factors such as money supply, merchandise exports, and industrial production remained unchanged over April, the NDC added.

Despite the composite index's muted performance, the NDC's leading economic indicators, which gauge the economic climate over the next six months, moved higher for the sixth month in a row in April, albeit at a reduced pace.

In April, the leading indicators rose 0.13 percent from a month earlier, down from March's 0.23 percent increase and the smallest monthly increase for six months, the NDC's data indicated.

In the six-month period, the leading indicators rose 2.26 percent, according to the NDC.

Graphic: National Development Council
Graphic: National Development Council

Wu said the slower growth in the April leading indicators showed that local economic growth momentum remained insufficient to have a comeback as a fall in global demand continued to hurt Taiwan's exports, which serve as the backbone of the country's economy.

Wu said it was hard to predict when the local economy would enter the yellow-blue range on the NDC's grading system, as a fragile world continued to push down demand.

Only when exports bounce back, production and sales of local firms will get a boost, accordingly, Wu said.

In addition, the market for consumer electronics gadgets such as phones and notebook computers stayed fragile, a significant departure from strong sales boosted by needs created by work from home and remote learning in the COVID-19 pandemic era, Wu said, adding it needs some time to digest inventories before production picks up.

"The local economy's consolidation continues and there is no immediate sign of a turnaround," Wu said. "But, Taiwan could have a better second half than the first on the back of a relatively low comparison base over the same period of last year."

The NDC said while the global economic slowdown will keep affecting Taiwan's exports, demand for emerging technologies such as high-performance computing devices, data centers, and artificial intelligence is expected to help the country's outbound sales.

The NDC added the government's efforts to push for green energy development and public work projects are expected to provide support to the local economy.

(By Hsieh Fang-wu and Frances Huang)


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