Tue, Aug 28, 2012 - Page 13 News List

Uncertainty curbs growth: CEPD

MIXED SIGNALS:Despite that some economic indicators have signaled modest improvement, the nation’s economy remains sluggish, according to analysts

By Amy Su  /  Staff reporter

The economic sentiment in Taiwan is being bogged down by both external and internal uncertainties, the Council for Economic Planning and Development (CEPD) said yesterday, citing the latest results for the composite monitoring economic indicators.

The score of the composite monitoring economic indicators — which track nine components — increased one point from a month earlier at 16 points last month, but that was still within the CEPD’s economic slowdown zone for the ninth straight month, according to the council’s monthly report.

The composite monitoring economic indicators have a scale of between nine and 45, with the lowest range — nine to 16 — represented by a “blue” light. The council uses a five-color spectrum to gauge domestic economic health, with “blue” signaling recession; “yellow-blue” a slowdown; “green” steady growth; “yellow-red” a slight overheating; and “red” overheating.

The nine months of "blue" light in a row is the second longest "blue" light period since the data were available in 1984, according to the council. During the 2000 Internet bubble, the council's data showed a straight 15 months of "blue" light.

The last time the nation saw the "blue" light flash for nine consecutive months was in the 2008 global financial crisis, the council's data showed.

The component of imports of machinery and electrical equipment gained one point from a month earlier, as the annual growth of the component turned positive after posting negative for the previous 12 straight months, the report said.

“Although some indicators implied improvements, the nation’s economic growth remained sluggish,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, told a press conference.

The council’s index of leading indicators, which is used to gauge the short-term economic outlook, increased 0.2 percent from a month earlier to 131.1 points, according to the monthly report.

However, the index’s annualized six-month rate of change — which provides a more accurate forecast of the short-term business cycle — decreased 0.3 percentage points to 4.9 percent last month from the previous month, marking the second month of consecutive decline.

Among the seven indicators making up the trend-adjusted leading index, the component of producer’s inventory for manufacturing was the only one reporting positive cyclical movements from the previous month.

Hung said the mixed results for the economic indicators showed the nation did not show a significant sign on either the positive or negative side, as concerns over the global and the nation’s economy still exist.

On the domestic front, Hung said the trend in the unemployment rate — which has been rising for the last two months because of a seasonal effect — and the continuous contraction of exports remained the two biggest economic concerns.

Externally, the latest figures on the leading indicators of the OECD and five Asian countries — China, India, Indonesia, Japan and South Korea — showed declining trend for the third and the 18th months in a row respectively, according to the council’s data.

In the meantime, the growing global prices of crude oil and other raw materials caused by speculation may also be a downside risk for the economy, Hung added.

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