Sat, Oct 25, 2003 - Page 11 News List

Business climate index now at 24-year high: TIER

By Joyce Huang  /  STAFF REPORTER

The Taiwan Institute of Economic Research (TIER, 台經院) yesterday said the business climate index rose from 113.99 in August to 117.03 points last month -- the fifth monthly rise in a row and the highest level since March 1979.

"The local economy is recovering and we are very bullish about the nation's economic outlook for later this year and next year," Wu Rong-i (吳榮義), TIER's president, told a news conference as he released the institute's monthly economic report.

"The signs of recovery are strong," he said.

A global economic recovery is under way and the institute said economic growth in the US and Japan has caused the nation's exports to shoot up.

Imports and public consumption have also picked up following the government's economic stimulus policies, Wu said.

The importing of new machinery appeared to flatten last month, the report said, indicating that the nation's private investment may not have picked up yet.

Wu said the machinery indicator may not truly reflect domestic investment anymore since the economy has gradually upgraded from a manufacturing-oriented to a service-based one, which requires less engineering equipment.

But although banks are still capital-abundant, short-term interest rates remain low at around 2.5 percent and consumer prices have fallen for five consecutive months, Wu said deflationary pressure still exists.

The NT dollar may not fluctuate too drastically in the foreseeable future, Wu said, adding that international pressures which forced Asian currencies to strengthen have started to ease off as a result of China's resistance to floating its yuan following the APEC meeting in Bangkok that wrapped up earlier this week.

The increased exports boost manufacturers' sentiment, with some 38.5 percent of companies polled expressing optimism about business conditions over the next six months.

About 53.5 percent of the companies said business conditions will remain stable over the next six months. Only 8 percent said they were pessimistic about business conditions over the next six months, the report said.

Export orders rose 20.4 percent last month to NT$523.21 billion (US$15.40 billion), a record high, from the same month last year, the Ministry of Economic Affairs reported on Thursday.

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