Sat, Mar 28, 2009 - Page 12 News List

Economic decline slows: CEPD

END OF THE TUNNEL? Despite optimistic views from a number of economists, the government continues to flash its blue light, indicating a strong economic downturn

By Crystal Hsu  /  STAFF REPORTER

The decline in the nation’s leading economic index slowed last month while the concurrent indicator dropped further, indicating a continued downturn and a bleak outlook for the six months ahead, the Council for Economic Planning and Development (CEPD) said yesterday.

“The index of leading indicators flashed a sixth consecutive blue light in February as the recession persisted,” Economic Research Department Director-General Hung Jui-bin (洪瑞彬) told a press briefing.

The adjusted leading index, used to project the economic picture six months in advance, slumped 22.5 percent, the 13th consecutive drop, from 24.3 percent in January, the council’s report showed.

Hong said the slowdown was a sign that the economic contraction may be bottoming out following improvements in M1B, producers’ inventory volume and semiconductor book-to-bill ratio measures.

The M1B money supply index, which includes currency held by the public and demand deposits, gained 4.5 percent year-on-year last month after seasonal adjustment, pushing the overall monitor score from nine to 10.

The central bank said on Wednesday that some people had channeled money from their time deposit accounts to passbook savings with part of the funds flowing to the stock market.

However, the improvements were not significant enough to alter the business climate signal, which flashed its sixth consecutive blue light, the report said.

The concurrent indictor, used to mirror the present economic state, shrank 3.7 percent for the 12th month to 73.5 points, compared with 76.3 points a month earlier, the report said.

CEPD researcher Wu Ming-huei (吳明蕙) attributed the downshift to falling outbound shipments, capital equipment imports and non-agricultural employment indexes.

Wu said that the contraction in the wholesale, retail and food services reading fell from 9.3 percent to 6 percent, while the drop in the industrial production index slowed from 34.8 percent to 33.2 percent.

Hong said he believed the consumer vouchers helped boost retail sales at department stores and hypermarkets in the last two months though longer observation was needed to prove the link.

Cheng Cheng-mount (鄭貞茂), head economist at Citigroup Taiwan Inc, said the worst of the recession could be over in light of the economic data.

The rebound in some indicators “could be a sign that the economy is bottoming out,” Cheng said in a note.

Jack Huang (黃蔭基), head of research at SinoPac Financial Holdings Co (永豐金控), agreed the economic woes were slackening, although he said the government’s business signal would continue to flash blue for the rest of the year.

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