Taiwan's economy stays stable due to strong tech sector

Taipei, Sept. 26 (CNA) Taiwan's economy remained stable in August as the high-tech sector continued to get a boost from growing global demand for emerging technologies such as artificial intelligence applications, the National Development Council (NDC) said Friday.

The composite index of economic indicators, which gauges the state of the economy, rose one point from a month earlier to 30 and continued to flash a "green" light in August, data released by the NDC showed.

It was the fourth consecutive month in which Taiwan's economy flashed a green light.

Another index of leading indicators assessing the state of the economy over the next three to six months, however, fell 0.24 percent from a month earlier to 99.59, marking the seventh straight month of decline, according to the NDC, Taiwan's top economic planning body.

Despite the seven-month decline, the fall in August was narrowed to 0.24 percent, down from 0.32 percent in July, indicating a potentially positive trend, the NDC said.

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 contraction (9-16 points).

Among the nine factors comprising the August composite index, the money supply (M1B) and changes in stock prices rose one point each from a month earlier, while sales posted by the manufacturing sector fell one point.

The other six factors -- industrial production, overtime hours, merchandise exports, machinery and electric equipment imports, revenue generated by the retail, wholesale and food/beverage business, and business sentiment among manufacturers -- stayed unchanged from July.

Chen Mei-chu (陳美菊), head of the NDC's Department of Economic Development, said solid global demand for AI continued to push up Taiwan's exports and production and stabilize the local economy in August.

The economy was uneven, however, as the information and communications industry served as the backbone of Taiwan's exports while non-tech industries underperformed, Chen said.

Chen admitted that business sentiment among local manufacturers, which flashed a blue light for the fifth consecutive month in August, was hurt by the weaker old economy sector.

With the uncertainty created by the United States' tariff policies remaining in place, it will not be easy for confidence among manufacturers to improve quickly, Chen said.

Chen said that while the global economy remained hampered by uncertainties, AI development was expected to continue to lend support to Taiwan's economy.

With the production capacity of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, fully utilized, Chen said she expected the local economy to continue to flash a green light the rest of the year.