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Economy flashes blue for a second consecutive month

The nation’s business cyclical barometers flashed blue for the second straight time last month, signifying a continued economic slowdown, the Council for Economic Planning and Development (CEPD) said yesterday.

“The government’s economic state monitor flashed blue for the second consecutive month in October,” after turning yellow-blue in August, CEPD economic research department director-general Hung Jui-bin (洪瑞彬) told a media briefing.

Hong said that the composite score for the business indicators stood at 12 last month — the same level as in September, signifying tough times ahead with recession forecast to hit the country’s major trade partners.

Most leading trend pointers contributed negatively to the overall index, led by large declines in indices for stock prices, export orders and average monthly overtime in industry and services, the CEPD report showed.

Share prices plummeted 47.5 percent last month, compared with a 31.6 percent drop in September, as investors exit the market and took shelter in times and savings deposits.

The semiconductor book-to-bill ratio narrowed its decline to 5.9 percent, from a drop of 6.6 percent a month earlier, Hong said, adding that the improvement was not a cause for optimism as the index remained in negative territory.

The index of non-agricultural employment gained 1 point last month even though the nation’s unemployment rate rose to 4.37 percent last month from 4.27 percent in September.

PESSIMISM

CEPD analyst Wu Ming-huei (吳明蕙) echoed the pessimistic sentiment, adding that all coincident indicators lost ground, led by the slump in industrial output, real manufacturing sales and real customs-cleared exports.

The latter posed the biggest concern, with exports last month contracting by a seven-year low of 8.3 percent to US$20.81 billion from a year earlier. Shipments to China and Hong Kong fell 19.9 percent to US$7.47 billion year-on-year, while exports to the US decreased 11.4 percent to US$2.57 billion.

Hong and Wu expressed hope that the various government economic stimulus, including the consumer voucher plan, would ease the blow of the financial storm that is evolving into a global economic gloom.

The Cabinet is due to formally introduce a new stimulus package valued at NT$420 billion (US$12.65 billion) that is aimed at raising GDP growth by 1.64 percentage points to meet its growth target of 2.12 percent.

But Chen Miao (陳淼), a researcher at the Taiwan Institute for Economic Research (台經院), voiced doubts that the government would be able to meet its growth target given its poor performance in executing the NT$58.3 billion planned spending to strengthen infrastructure facilities this year.

The special spending program, intended to push up GDP growth by 0.45 percentage points this year, has yet to be completely distributed, let alone get the projects done, Chen said.

He forecast that the economic light would remain blue in the months ahead.
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