Despite the nation’s economy having bottomed out in the first half of this year, the Council for Economic Planning and Development (CEPD) said yesterday there was no sign of a significant rebound in the near future because of continuing global economic uncertainties.
The council made the remark after its composite monitoring economic indicators — which track nine components — flashed a “blue light” last month, indicating weakness for the eighth straight month, with the score remaining unchanged from a month earlier at 15.
The eight consecutive blue-light signals are nearing the number seen during the global financial crisis, which saw the blue light flash for 10 consecutive months between 2008 and 2009, the council said in its monthly report.
“The trend in economic indicators for this year showed Taiwan’s economy in the first half has indeed been sluggish,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, told a press conference.
Hung said that the economy has bottomed out in the first half of the year and would gradually recover in the second half.
However, the recovery momentum could be relatively weak this time, like a “pan-shaped” rebound, compared with the strong “V-shaped rebound” seen after the global financial crisis, Hung added.
The trend in the council’s latest data on leading indicators supported Hung’s views.
The index of leading indicators, which is used to gauge the short-term economic outlook, increased 0.4 percent from a month earlier to 131.3 points, the report said.
The index’s annualized six-month rate of change, which provides a more accurate forecast of the short-term business cycle, also climbed 0.1 percentage points to 5.9 percent last month from the previous month, marking 10 months of consecutive improvements and reflecting positive sentiment for the economy in the near future.
However, the month-on-month rise of 0.1 percentage points was slower than the 0.3 percentage points posted in May, with the downturn trend in growth continuing for five straight months, the data showed.
Hung forecast the nation’s economy would not deteriorate further in the near future, but would show no significant rebound because of the continuing sluggish global economy, which could affect the nation’s exports and further drag down domestic consumption and investment.
The latest leading indicator indices of the Organisation for Economic Co-operation and Development and five Asian countries — China, India, Indonesia, Japan and South Korea — both showed a downturn, providing more evidence of the sluggish global economy, data provided by the council showed.
Hung said the government had prepared a series of short-term stimulus measures, with boosting investment to be the priority.