Sat, Dec 27, 2008 - Page 12 News List

CEPD says three blue months in a row for economy

By Crystal Hs  /  STAFF REPORTER

Taiwan’s business cyclical barometers flashed blue for the third straight time last month, suggesting deepened economic downside risks ahead, the Council for Economic Planning and Development (CEPD) said yesterday.

“The total score for the government’s economic monitoring indicators dropped 1 point to 11, flashing the blue signal for the third consecutive time in November,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, told a media briefing.

October’s score was 12 out of a perfect 45.

The figures meant the nation’s economic activity weakened last month as seen in the drop in leading and coincident indexes.

The composite leading index, which is used to forecast the economic climate six months ahead, stood at 100.3 points last month, down 0.8 percent from October, the council report showed.

Hung blamed the decline on shrinking export orders, stock price and monthly overtime industry and services measures.

Export orders, which foretell outbound shipments one to three months ahead, plunged to historic lows last month, with orders from China posting the sharpest decline of 45.38 percent year-on-year, the Ministry of Economic Affairs said on Wednesday

Hung refused to speculate on the timing of a recovery, noting that the global financial storm has yet to settle and the world economic picture remained turbid.

“I consider it better to postpone speculation until the first or second quarter of next year when visibility is expected to improve,” he said.

The coincident index, which tracks industrial output, custom-cleared exports, manufacturing sales, electric power consumption and other measures, pared 5.8 percent to 92.1 points last month from October, the report said.

Council analyst Wu Ming-huei (吳明蕙) said all component indicators contributed negatively to the index, adding the trend-adjusted indicators dropped 6 percent to 83.3 points.

Custom-cleared exports contracted 23.3 percent to a seven-year low of US$16.78 billion last month, prompting the central bank to cut key interest rates by 75 basis points earlier this month.

The decline in share prices widened to 48.8 percent last month from 47.5 percent in October, the report showed.

Meanwhile, imports of capital equipment dropped 19.8 percent, from minus 4.8 percent a month earlier, as companies halt investment or expanding plans, the report said.

Monetary supply and finance indexes showed minor improvement but council officials warned they should not be taken for signs of recovery as both indicators remained in the negative zone.

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