Taiwan's economy continues cooling in October

Taipei, Nov. 27 (CNA) Taiwan's index gauging the state of the economy flashed a "yellow-red" light in October, indicating a moderately hot economy, according to data from the National Development Council (NDC) released on Wednesday.

The composite index of economic indicators decreased by two points to 32 from that in September, the lowest since April, the data showed.

The Cabinet-level 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 moderately hot economy, and red pointing to an overheated economy.

The score of 32 is on the lower end of the yellow-red range.

The NDC said that short-term factors have driven down the overall index despite an improving old-economy sector.

NDC Department of Economic Development Director Chiu Chiu-ying (邱秋瑩) said that of the index's nine subindexes, industrial production cooled from a red light to a yellow-red light, while the sales posted by the manufacturing sector cooled from a yellow-red light to a green light.

The remainder of the seven subindexes remained unchanged.

They are money supply, changes in stock prices, overtime hours in the industrial and service sector, merchandise exports, imports of machinery and electric equipment, revenue generated by retailers, wholesalers, and food and beverage shops and business sentiment.

Regarding industrial production, Chiu said that it is due mainly to short-term causes such as the typhoon days off in early October, as well as scheduled production line breaks in the petrochemical industry.

While on the lower rim, the economy is still flashing yellow-red, so the economy is still under stable recovery, Chiu said.

Although exports of high-end artificial intelligence (AI) products have gone down, Chiu said she believed this was a temporary rough patch. As new AI applications are released, the production and exports of servers should see a rebound, she said.

In the old economy sector, the chemistry industry and the petrochemical industry have turned weaker, but the basic metal industry and the machinery industry have already bound back. Overall, the old economy has been recovering better than in September, Chiu said.

Anniversary sales in department stores as well as new electronic products' release fall in the fourth season in Taiwan, making it the typical sales peak season. Therefore, she is cautiously optimistic about the year-end economy.

Looking to the future, the NDC said that international institutions commonly predicted that global trade growth will rise higher in 2025 than this year, indicating that demand trends will continue to increase.

In addition, with new technology applications such as AI and high-performance computing expanding, it can be expected that exports will keep growing, the NDC said.

However, as there are still unstable factors such as the economic and trade policies of U.S. President-elect Donald Trump and geopolitical conflicts, it is necessary to keep an eye on the influences on the domestic economy.