Sat, Jul 27, 2013 - Page 13 News List

CEPD economic index flashes green

GROWTH EXPECTED:After nine months, a gradual recovery of the local economy is expected after the CEPD’s index of economic indicators showed ‘steady growth’

By Camaron Kao  /  Staff reporter

The Council for Economic Planning and Development’s (CEPD) index of economic monitoring indicators last month flashed “green” after showing “yellow-blue” for nine consecutive months, indicating a gradual recovery of the local economy, the council said yesterday.

Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, said he expected to see continued improvement in the index this month with optimism for the stock market and business activities.

The council uses a five-color spectrum to gauge economic health, with “blue” signaling recession, “green” steady growth and “red” overheating, while “yellow-blue” indicates a transition between recession and growth, and “yellow-red” a transition between growth and overheating.

The latest report showed the score of monitoring indicators — which takes into account both leading and coincident indicators — rose four points to 23 points last month from 19 points in May because of higher growth in exports, industrial production, imports of machineries and electrical equipment, and manufacturing sales last month compared with a year ago.

The stock price index flashed a “red” light for the second consecutive time last month, indicating a stronger performance for the local bourse, the report said.

The index of leading economic indicators, which is used to gauge the nation’s short-term economic outlook, posted its 11th consecutive increase to 104.2 points last month, up 0.6 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 0.2 percentage points to 7 percent last month from a month earlier, the report said.

The index of coincident indicators, which reflects monthly economic conditions, rose 0.4 percent to 99.9 points last month, marking the third consecutive increase, according to the report.

However, former council chairman Chen Pao-chih (陳博志) said he was more cautious about the second half of the year.

“The higher performance of the stock market last month compared with a year ago was because the government proposed the capital gains tax a year ago, which created uncertainty for the stock market the previous year,” Chen said by telephone yesterday.

Chen said Taiwan will not show a clear sign of recovery until the economy shows significant improvement in industrial production, exports, investment, employment and consumption from a year ago, and the growth has to be sustained for at least three months.

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