Taiwan's economy maintains stable growth in June

Taipei, July 28 (CNA) An index giving an overview of Taiwan's economy flashed a "green light" for the second consecutive month in June, indicating continued stable growth, according to a report released by the National Development Council (NDC) on Monday.

The composite index of economic indicators fell two points in June from the previous month to 29, the lowest since February 2024 when it was also 29, according to NDC data.

The NDC uses a five-color system to track the economy, with red signaling overheating (38-45 points), yellow-red indicating a warming economy (32-37 points), green meaning stable growth (23-31 points), yellow-blue reflecting sluggishness (17-22 points), and blue signaling recession (9-16 points).

Among the nine factors in June's composite index, those measuring overtime hours in the industrial and service sectors shifted to a green signal -- down from yellow-red, the data showed.

This was due mainly to companies taking a wait-and-see approach amid uncertainty over international tariff policies and a slowdown in shipments from Taiwan's industrial sector, said Chen Mei-chu (陳美菊), deputy head of the NDC's Department of Economic Development, at a media briefing on Monday.

Meanwhile, the sub-index for the wholesale sector and the food and beverage industry also dropped to yellow-blue from green, due primarily to delays in the delivery of imported vehicles, the NDC data indicated.

The remaining seven indicators remained unchanged in June, with four key indicators -- industrial production, merchandise exports, imports of machinery and electronic equipment, and manufacturing sector sales -- staying in the red-light range.

The sub-indexes for money supply and manufacturers' business sentiment maintained a blue light, while the sub-index for stock price changes continued to flash yellow-blue, according to the report.

Chen said that while the leading index continued to decline, the coincident index climbed for the 26th consecutive month, reflecting domestic economic stability.

Since the beginning of the year, the United States' tariff policy has significantly impacted the global economic climate, she noted.

Taiwan's economic outlook for the second half of the year remains uncertain, with the Aug. 1 deadline for the implementation of higher U.S. tariffs approaching, Chen said.

Furthermore, Taiwan has not yet announced any reciprocal tariff rates, she noted, adding that tariffs in the semiconductor sector are critical to the country's economic performance and must be monitored carefully.

Despite the uncertain economic outlook, Chen said, countries around the world continue to invest in AI infrastructure. Major international tech companies are increasing their capital expenditures, and demand for high-end AI servers and chips remains strong, she said.

Domestically, Taiwan Semiconductor Manufacturing Co. (TSMC)'s 2nm technology maintains a global lead and will be ready for mass production in the second half of the year, which is expected to boost Taiwan's export performance, she said.

Chen said that while demand for old-economy products has softened, AI continues to be a key driver of Taiwan's exports and economic growth.

In addition, international forecasting institutions have slightly raised their global economic growth outlook, amid the U.S.' impending increase in "reciprocal" tariffs on several countries, she said.

Taiwan stands to benefit from a stable global economy and strong AI momentum, and its economic signal for the second half of the year still has a chance to remain in the green-light range, Chen said.