Tue, Oct 29, 2013 - Page 13 News List

Index of economic indicators suggests strong economic growth in near future

By Camaron Kao  /  Staff reporter

The index of leading economic indicators grew 0.33 percent to 101.32 points last month from a month earlier, suggesting the economy could post significant growth in the near future, the Council for Economic Planning and Development said yesterday.

“We observed a clearer sign of economic improvement in the near future as the index of leading indicators reported consecutive increases in the past three months,” council researcher Lin Lih-jen (林麗貞) said.

Last month, the 33 percent month-on-month growth of the index of leading indicators, which is used to gauge the nation’s short-term economic outlook, was higher than 0.29 percent in August and 0.19 percent in July, the data said.

“We expect the local economy to improve gradually this quarter and to post stronger recovery starting next year,” council chief secretary Kao Shien-quey (高仙桂) said.

Economic conditions in the US, Europe and China are all expected to register higher growth this quarter compared with last quarter, Kao said, adding that these economies would post higher growth next year compared with this quarter based on the forecast of Global Insight, an independent economic and financial services firm.

“We believe the nation’s exports will benefit from an improving global economy and rebound from the 7 percent year-on-year decline last month,” Kao said.

However, uncertainties still remained as the US is set to decide whether to lift its debt ceiling before Feb. 7 next year, and consumer confidence in Taiwan might be affected by recent cooking oil scandals, reducing the number of people who dine out, Kao said.

“The impact of the oil scandals to the economy depends on how quickly we can crack down on problematic food and restore consumer confidence,” she said.

The index of coincident indicators, which reflects monthly economic conditions, rose 0.01 percent to 98.87 points last month, the council said.

The latest report showed the score of monitoring indicators — which takes into account both leading and coincident indicators — flashed “yellow-blue” and declined one point to 19 points from the revised 20 points a month ago.

This was because of the mixed results between lower export growth and manufacturing sales and higher growth of imports of machineries and electrical equipment compared with a year ago, the council said.

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.

However, former council chairman Chen Po-chih (陳博志) was less optimistic. “It is difficult for the local economy to grow when the manufacturing sector and exports are still low, and conditions for the future are highly uncertain concerning the problem of the debt ceiling in the US,” he said.

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