Taiwan’s manufacturing sector is expected to post growth this year, but will not return to the level seen before the financial crisis by the end of the year, a report by the Ministry of Economic Affairs’ Industrial Development Bureau (IDB) said yesterday.
The manufacturing sector will rebound this year based on increasing investor confidence and an improving employment picture globally, the IDB said in the report.
LOSING MOMENTUM?
The bureau warned, however, that the global economic recovery could lose momentum after the economic stimulus programs adopted by various governments around the world were gradually phased out.
Because of the impact of the global economic downturn, the monthly index of manufacturing production suffered a steep decline after September 2008 and fell to a new low of 63.79 points in January of last year, the IDB said.
SIGNS OF RECOVERY
A number of industries began to register growth in the fourth quarter of last year, while others experienced slower rates of decline, and the index of manufacturing production rebounded to 115.97 in December — all indications that the manufacturing sector had recovered from the recession, IDB said.
The index averaged 112.97 in the first seven months of 2008, before the economic slump began taking its toll.
GRADUAL REBOUND
Though the December index surpassed the average in the first half of 2008, the IDB said that other factors, such as Taiwan’s high unemployment rate and unclear export demand in the second half of the year, would make it difficult for the manufacturing sector to rebound to the level it attained prior to the financial crisis.
Despite the gradual recovery of industrial production in the US, Japan and Europe, end market demand in those economies remains uncertain, leading IDB to conclude that there was only limited room for Taiwan to expand exports to those three markets.
IDB said, however, that there was ample opportunity for domestic manufacturers to expand their market share in China, as China’s orders were expected to rise because of the country’s strong domestic market and its better-than-expected economic recovery.
IDB also warned of potential uncertainty created by the appreciation of the Chinese currency.
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