Thu, Jul 28, 2011 - Page 12 News List

Expansion of economy may slacken: CEPD

By Amy Su  /  Staff Reporter

The nation’s leading indicator rose at a slower pace last month, providing more evidence that the nation’s economic expansion may slacken in the near future, the Council for Economic Planning and Development (CEPD) said yesterday.

The composite leading indicator index, which is used to gauge the economic outlook for the upcoming six-month period, stood at 128.8 points, up by 0.2 percent from a month earlier, the council’s statistics showed.

However, the index’s annualized six-month rate of change, which provides a more accurate forecast of business cycles, decreased by 0.1 percentage points to 3.2 percent, indicating 19 months of consecutive decline.

“The slowing trend of the leading indicator’s growth shows that economic momentum may weaken in the second half of the year,” Council for Economic Planning and Development Vice Chairman Hu Chung-ying (胡仲英) told a media briefing.

CYCLE OF EXPANSION

However, the continuing increase of the indicator shows that the nation is still in a cycle of economic expansion, which will also continue into the second half, Hu added.

The latest leading indicator indices of the G7 developed countries, the OECD and five Asian countries — China, India, Indonesia, Japan and South Korea — all slackened.

That indicates that global economic momentum has slowed, which may further impact Taiwan’s exports, the council said in a report.

That would prompt domestic demand to play a more important role in driving Taiwan’s economic expansion to reach 5.06 percent — the latest forecast by the Directorate-General of Budget, Accounting and Statistics — this year, Hu said.

BOOST DEMAND

“Raising the minimum wage, the relaxation on Chinese free independent travelers and potential government policies to boost market sentiment ahead of the upcoming presidential election next year will help boost domestic demand,” he said.

Of the seven components that make up the leading index, only the semiconductor sector’s book-to-bill ratio experienced a positive cyclical movement last month from the previous month, the report said.

The other six moved down, the report said.

The coincident index rose 0.01 percent to 134.97 points from a month earlier last month, with its trend-adjusted index decreasing by 1 percent to 100.6 percent, the report showed.

The total score of monitoring indicators dropped by one point down to 26, flashing the “green” signal for the fourth consecutive month, with three of the nine components — industrial production, imports of machinery and electrical equipment — each losing one point and changing their individual signals from “yellow-blue” to “green,” according to the CEPD’s data.

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