Taiwan economy still strong but March index down on tariff threats

Taipei, April 28 (CNA) Taiwan's economy continued to flash a "yellow-red" light in March, indicating ongoing strength, but the light's underlying index fell from a month earlier amid concerns over tariff threats, the National Development Council (NDC) said Monday.

Data compiled by the NDC indicated the composite index of economic indicators fell 3 points from a month earlier to 34 in March, in the middle of the 32-37 range for yellow-red lights.

While an export boom continued in March as buyers continued to build up their inventories, tariff concerns dampened stock investors' confidence and manufacturers' business sentiment, the NDC said.

Among the nine factors in the March composite index of economic indicators, the sub-indexes on stock price changes, sales posted by the manufacturing sector, revenue generated by retail/wholesale and food/beverage industries and business sentiment among manufacturers fell one point each in March.

The sub-indexes on overtime working hours in the industrial and service sector moved higher by a point, however, while the sub-indexes for money supply, industrial production, merchandise exports, and machinery and electric equipment imports, stayed unchanged.

April 28: Taiwan shares end up above 20,000 point mark

April 28: Taiwan's consumer confidence hits near 1-year low: Survey

A separate index of leading indicators assessing the state of the local economy over the next three to six months also was down in March from a month earlier, according to the NDC, the top economic planning body in Taiwan.

In March, the leading indicators fell 0.15 percent from a month earlier to 102.14, stopping a four-month rising streak, the NDC said.

Among the seven factors in the March leading indicators, the NDC said, the sub-indexes for export orders, money supply, stock price changes and business sentiment among manufacturers moved lower from a month earlier.

The other three sub-indexes, for employment, total floor area of new construction projects, and semiconductor equipment imports moved higher from February in March, the NDC said.

Chiu Chiu-ying (邱秋瑩), head of the NDC's Department of Economic Development, said the latest yellow-red light came as many foreign buyers scrambled to place orders ahead of schedule as U.S. President Donald Trump repeatedly threatened to impose tariffs in April.

While spurring buyers to action, those tariff threats also made many companies in Taiwan grow more cautious over their business outlook, pushing down the leading indicators, Chiu said.

April 28: Taiwan should seek tariff exemption for ICT products: Think tank

April 28: Premier Cho seeks support for NT$410 billion tariff-countering bill

On April 2, Trump announced "reciprocal" tariffs on countries that have a large trade surplus with Washington, including Taiwan, which was slapped with a 32 percent import duty.

The White House announced a 90-day pause on the new measures on April 9, with a 10 percent duty applied to all countries except China.

The NDC said Taiwan is expected to continue to ride the wave of growing artificial intelligence development to boost exports and investment in the expansion of production capacity.

Concerns over the U.S. tariff policies, growing trade tensions between Washington and Beijing, and adjustments in the monetary polices of major central banks, however, are expected to bring more uncertainty to the global economy, the NDC said.

Before the 90-day pause expires, Chiu said, overtime working hours in the composite index of economic indicators could keep growing, with foreign clients placing orders ahead of schedule to beat new tariffs.

But Chiu said it is hard to predict what will happen after that, and she expected Taiwan's economy to face challenges in the second half of this year.