Fri, Feb 28, 2014 - Page 13 News List

Index reflects slowdown in China, Southeast Asia

By Camaron Kao  /  Staff reporter

The National Development Council’s (NDC) index of economic monitoring indicators flashed “yellow-blue” last month after showing “green” a month ago, as an economic slowdown in China and Southeast Asia affected the nation’s recovery, the council said yesterday.

“The monitoring indicator index is likely to shift between ‘green’ and ‘yellow-blue’ during the initial period of economic recovery, especially when the momentum is weak,” council chief secretary Kao Shien-quey (高仙桂) told a press conference yesterday.

Kao said the nation’s economic growth would become more steady after the next six months, as research institutes and companies showed strong confidence in growth in the global and local economy at that time.

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.

According to Kao, a slowing economic momentum in China was caused by its structural reform to tighten bank lending and adjust overproduction, causing a decline in HSBC’s purchasing managers’ index (PMI) in China last month to 50.7 points from 50.9 points the previous month.

Southeast Asia was hit by capital outflows after the US government tapered its quantitative easing policy, Kao said.

Kao said stock markets in Southeast Asia showed signs of stabilization this month, but the economic slowdown in China still remained an uncertain factor for the nation’s future economy.

“Our economy is linked more closely to Asian countries and less influenced by a bullish economy in the West,” Kao said.

The leading indicators of five Asian countries — China, India, Indonesia, Japan and South Korea — posted their 11th consecutive declines last month to 99.3 points, down 0.01 points from a month earlier, the council said.

However, the leading indicators of members of the Organisation for Economic Co-operation and Development (OECD) reported their 15th month of consecutive growth to 100.9 points, up 0.1 points from a month ago, according to the council.

The latest report showed that the score of the nation’s monitoring indicators — which takes into account both leading and coincident indicators — declined two points to 22 points from 24 points a month earlier, because of lower annual growth in “industrial production,” “imports of machineries and electrical equipment” and “producers’ shipments for manufacturing” compared with a month ago, the council said.

The index of leading economic indicators, which is used to gauge the nation’s short-term economic outlook, also declined 0.05 points to 100.84 points last month after 16 consecutive increases since September 2012, the council said.

However, the index of coincident indicators, which reflects monthly economic conditions, increased 0.43 points to 100.97 points last month from 100.54 points a month ago, according to the council.

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