Taiwan's economy turns stable in January

Taipei, March 4 (CNA) Taiwan's economy turned stable in January, as an index gauging economic conditions flashed a "green" light in January on signs of improvement in production, investment, and retail sales, the National Development Council (NDC) said Monday.

The leading indicators assessing the state of the economy over the next three to six months also moved higher for the fourth consecutive month in January, indicating economic growth on the horizon, the NDC said.

Data compiled by the NDC, Taiwan's top economic planning body, showed the composite index of economic indicators rising five points from a month earlier to 27, the highest level since May, when the index reached 28.

That fell in the "green light" category, ranging between 23 and 31 points, compared with a reading of 22 in December that fell in the "yellow-blue light" category ranging between 17 and 22.

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.

Among the nine factors in the January composite index, the sub-indexes for the money supply, industrial production and imports of machinery and electric equipment rose one point from a month earlier to improve to a yellow-blue light, the NDC said.

In addition, the sub-index for revenue generated by the manufacturing sector also rose one point from a month earlier to flash a green light in January, compared with a yellow-blue light in December, the NDC said.

The sub-indexes for retail sales and revenue generated by the wholesale and food/beverage industry rose three points from December to flash a yellow-red light in January, compared with a blue light a month earlier, the NDC said.

Bucking the improvements in most of the composite index's factors, the sub-index on merchandise exports fell two points from a month earlier to a green light, according to the NDC.

The NDC said that with inventory adjustments in global markets coming to an end, demand showed signs of recovering, and the growing popularity of emerging technologies also lent support to the local economy.

Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development, said that despite a fall in the sub-index on merchandise exports in January, its green light indicating that exports remained stable.

Taiwan's exports should return to a growth pattern this year after slumping last year, Wu said, citing a forecast by the Directorate General of Budget, Accounting and Statistics (DGBAS).

At the end of February, the DGBAS forecast that Taiwan's exports in merchandise and services will grow 5.90 percent in 2024, after falling 4.32 percent in 2023.

Feb. 29: Taiwan's GDP growth forecast upgraded to 3.43% for 2024

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Wu said that as global demand rises, exporters in Taiwan were more willing to expand their capacity and import machinery and electric equipment to meet their clients' needs, which has helped prop up the overall economy.

Wu acknowledged that the five-point spike in January was also the result of more working days during the month, given that the number of working days in January 2023 was reduced by a long Lunar New Year holiday.

She suggested that data for the January-February period should be observed together for a better assessment of the local economy. In 2024, the Lunar New Year holiday fell in February.

As for the leading indicators, which rose 0.80 percent in January, all seven factors -- export orders, money supply, changes in stock prices, employment, semiconductor equipment imports, the floor area of new property projects, amd manufacturing sentiment -- moved higher from a month earlier.

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Feb. 7: Taiwan's exports up for 3rd straight month in January

In the previous four months, the leading indicators rose 2.28 percent, Wu said, noting that the growth was not very significant but still showed the economy improving at a mild pace.

Wu cautioned, however, that uncertain external factors could adversely affect Taiwan's economy this year, including how China and the eurozone economies will evolve amid lingering geopolitical tensions.