Taiwan's economy back in contraction mode in October: NDC

Taipei, Nov. 27 (CNA) Taiwan's overall economic monitoring indicators flashed a "blue" light for October, indicating an economy in contraction after a sluggish performance a month earlier, the National Development Council (NDC) said Monday.

In its latest report, however, the NDC suggested the factors pulling down the October monitoring indicators index were likely temporary, and it expected improvement in the coming months.

The NDC, the nation's top economic planning agency, employs a five-color-coded system to rate Taiwan's economic performance according to nine indicators.

A blue light (9-16 points) indicates a contracting economy, yellow-blue (17-22) represents sluggishness, green (23-31) signals stable growth, yellow-red (32-37) refers to a warming economy, and red (38-45) points to a booming or possibly overheated economy.

Taiwan's monitoring indicators had flashed "blue" lights from November 2022 to August 2023 before improving in September to a "yellow-blue" light, but then edged backwards in October, the NDC said.

The monitoring indicator index totaled 16 in October, down from 17 in September primarily due to global economic uncertainty and a shift from positive export growth in September to negative export growth in October, the NDC said.

Seven of the nine variables measured in the October report were unchanged from September, including the M1B money supply, industrial production, nonagricultural employment, and machinery and equipment imports, and manufacturing sales.

Of the two variables that changed, exports were downgraded from a "green" light in September to a "blue" light in October, while the light for stock prices on the Taiwan Stock Exchange went from "yellow-red" to "red" during the period, according to NDC data.

Chiu Chiu-ying (邱秋瑩), deputy director of the NDC's Department of Economic Development, said actual export figures for September and October were NT$1.24 trillion (US$39.29 billion) and NT$1.23 trillion respectively, showing minimal difference.

This indicated that export momentum remained strong, and that the economy was on a recovery trajectory with only minor short-term fluctuations, she said.

Chiu said exports were expected to revert back to positive growth in November and December, citing leading indicators.

According to the agency, the declines in the industrial production index and manufacturing sales index were smaller than in recent months, and the stock market saw significant gains, also pointing in a positive economic direction.

Growth in employment and rising sales in the retail and catering sectors also suggested stability in the domestic labor market and domestic demand, the NDC said in the report.