All cyclical indicators posted negative growth last month, triggering the Council for Economic and Planning and Development’s (CEPD) “blue light” indicator for the domestic economy. With the global financial storm battering the equity market and dampening export orders, industrial productivity and consumer spending both took hits.
It was the second time the government’s economic barometers turned blue in three months, confirming an economic slowdown that is expected to last between 10 and 15 months, council officials said.
“The business cyclical indicators flashed blue in September after turning yellow-blue in August,” Hung Jui-bin (洪瑞彬), director-general of the CEPD’s economic research department, told a press briefing. “The total score for the [domestic economic] climate dropped 6 points to 12, the lowest since December 2001. Authorities must not take these signals lightly.”
All seven leading trend indexes lost ground last month, with export orders and industrial output showing the biggest declines, the report showed. The score stood at 18 in August, out of a perfect score of 45.
“Exports fell 1.6 percent last month,” Hung said. “Without a robust showing in exports, the nation’s economy will suffer.”
Last month, growth in export orders slowed to single digits for the fourth straight month, as demand from China continued to weaken, the Ministry of Economic Affairs said last week.
Export orders gained only a disappointing 2.82 percent year-on-year last month to US$31.79 billion, the lowest gain since April 2002, the ministry said.
Orders from China, which account for 40 percent of the nation’s shipments, fell for the second straight month to 10.79 percent from a year earlier, after declining 8.86 percent in August.
Hung said the TAIEX, which plunged 31.6 percent last month, also contributed to the gloomy sentiment.
The economic official declined to speculate on when the economy would recover, saying that past slowdowns had lasted between 10 and 15 months.
“Hopefully the government’s stimulus measures can rein in the downward trend in the second half of next year,” Hung said.
The coincident index stood at 109 points, down 0.7 percent, while the trend-adjusted index dropped 1.2 percent to 96 points — its seventh consecutive monthly decline.
CEPD analyst Wu Ming-huei (吳明蕙) said all the sub-indicators of the coincident index had been negative, citing in particular a weak industrial production index, along with disappointing manufacturing sales and exports that have already cleared customs.
In related developments, more manufacturers and service providers felt pessimistic about their business outlook last month, a report conducted by the Taiwan Institute of Economic Research (TIER, 台經院) showed yesterday.
The think tank said firms with a bearish outlook soared to 60.9 percent from 29.4 percent in August.
The climate indicator for the manufacturing sector fell 5.59 points to 99.44, the lowest since August 2001, the TIER report said.