Taiwan's economy slows in May amid weak demand for traditional goods

Taipei, June 27 (CNA) Taiwan's economic index in May cooled off to "stable growth" from "warming" due to weak demand for traditional goods, according to a report released by the National Development Council (NDC) on Friday.

The economy flashed a "green light" with the composite index falling two points from April to 31, the first green light signal since March 2024.

The NDC uses a five-color system to track the economy: red signals overheating (38-45 points), yellow-red indicates a warming economy (32-37 points), green means stable growth (23-31 points), yellow-blue reflects sluggishness (17-22 points) and blue denotes recession (9-16 points).

Of the nine factors in the composite index, the revenue generated by retailers, wholesalers and food and beverage sectors indicator dropped two points, from a red light to a green light.

The other indicators -- including stock price changes, manufacturers' business sentiment, merchandise exports, money supply, overtime hours in the industrial and service sectors, imports of machinery and electronic equipment and industrial production -- remained unchanged.

Chen Mei-chu (陳美菊), deputy head of the NDC's Department of Economic Development, told reporters that old economy industries are pressured by low-cost international competition and the appreciation of the Taiwan dollar.

In addition, potential car buyers are holding off to see how tariffs might affect prices. Economic uncertainty has also caused consumers to delay big-ticket purchases. As a result, the number of car listings in May fell by 20 percent, Chen said.

Chen said the uncertainty surrounding tariff policy developments in the United States and orders placed in advance may affect exports in the second half of the year, leading businesses to become more cautious.

As a result, NDC's leading indicators index for forecasting economic conditions over the next six months fell 0.8 percent to 99.74.

However, Chen noted that the coincident indicators index, which reflects the current state of the economy, rose 1.88 percent to 109.55, showing that the economy is still stable.

She added that a green light signals stability and is not a negative sign.

A positive factor for the economy is that artificial intelligence (AI) is a "rigid demand," with prospects of continued boom, she said.