The index of economic monitoring indicators last month flashed “yellow-blue” for a record ninth consecutive time, indicating a lackluster performance of local economy, the Council for Economic Planning and Development (CEPD) said yesterday.
The council uses a five-color spectrum to gauge domestic economic health, with “blue” signaling recession, “green” steady growth and “red” overheating.
Following this, the council uses “yellow-blue” to indicate a transition between recession and growth, and “yellow-red” for a transition between growth and overheating.
The latest report showed the score of composite monitoring indicators — which takes into account both leading and coincident indicators — was 19 last month, up 2 points from April, because of the mixed result of higher exports, rising stock market, higher monetary aggregate M1B and lower trade and food service sales last month compared with the same period a year ago.
“The declining trade and food services sales index was due to the rising food safety concerns after industrial starch was found in certain food products,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, told a press conference.
However, Hung said consumers’ concerns over food safety will ease since businesses and the government took immediate action to rectify the problem.
The index of leading economic indicators, which is used to gauge the nation’s short-term economic outlook, posted its tenth consecutive increase to 104.5 points last month, up 0.7 percent from a month earlier, the report said.
The index’s annualized six-month rate of change, which provides a more accurate forecast of the business cycle in the near term, climbed 0.5 percentage points to 7.6 percent last month from a month earlier, the report said.
The index of coincident indicators, which reflects monthly economic conditions, rose 0.002 percent to 98.8 points last month, marking the first increase after ninth consecutive declines, according to the report.
“According to the forecasts of Global Insight and the IMF, the global economy would improve from quarter to quarter this year, which would benefit local economy,” Hung said.
However, uncertainties still remain as the US plans to start unwinding its quantitative easing (QE) policy later this year, the value of Japanese yen is still weak and economic growth in Germany and France looks to lose steam, he said.
“The economy is extremely sensitive to shocks and uncertainties because growth momentum is weak,” Hung said.
Hung said he expected the impact of Fed's announcement of ending its QE policy to start to show in this month’s report.
“The economy will not improve significantly if more fundamental aspects, such as investment and salaries, do not increase,” former council chairman Chen Pao-chih (陳博志) said by telephone yesterday.
“The condition of the stock market and the monetary aggregate [which rose last month] may provide an indication of the economy, but we cannot say autumn is coming when we see one falling leaf,” he said.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is