Sat, May 27, 2006 - Page 12 News List

Eight months of healthy growth come to an end

`YELLOW-BLUE' The CEPD said that figures for last month indicate a slowdown stemming from the negative impact of customs-cleared exports


The economy has shown signs of a slowdown, after eight consecutive months of "green light" figures for healthy growth came to an end, the government's economic policymaking body said yesterday.

The total score of monitoring indicators for last month came in at 22 points, down from 23 points in the preceding month, and signaled a "yellow-blue light," which indicates a slowdown in the economy, the Council for Economic Planning and Development (CEPD) said.

Last month's showing ended eight consecutive months of "green light," which signals steady growth, since August last year, the council said.

The leading index -- comprising seven indicators including stock markets, wholesale prices, monetary supply, export orders and construction licenses -- are designed to measure Taiwan's economic activity three months ahead.

The council uses a five-level spectrum to gauge domestic economic health, with "blue" indicating recession, "yellow-blue" a slowdown, "green" steady growth, "yellow-red" a slight overheating and "red" an absolute overheating.

But the index of leading indicators for last month stood at 108.7 points, up 1 percent from March, when it registered a revised 1.9 percent month-on-month fall, it said.

The original March reading for the index of leading indicators, which is used as a gauge for the economy's direction in the coming months, was a 2.3 percent month-on-month decline.

Last month's index of coincident indicators, which coincides with the current pace of economic activity, rose 0.8 percent month-on-month to 113.5 points, after it posted a 1.1 percent drop or a revised 1.4 percent fall in March, the council said.

Hung Jui-bin (洪瑞彬), director-general of the economic research department at the council, attributed the changes in monitoring indicators to the negative impact of customs-cleared exports.

Customs-cleared exports posted a smaller year-on-year increase last month compared with that in March.

"All other indicators moved in an uptrend but the seasonally adjusted exports [year-on-year] growth narrowed, cutting the score by one and brought the flash to yellow-blue light," Hung said.

"We will see whether this [yellow-blue light] is just an independent scenario," he said.

Separately, a survey of manufacturers last month showed that 18 percent of respondents expect the economy to improve over the next three months, unchanged from a month earlier.

Some 14 percent of respondents held a negative view, up from 9 percent in the preceding month.

The council said that 68 percent of manufacturers expect the economy to maintain its current direction, down from 73 percent in March.

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