Thu, Nov 26, 2015 - Page 13 News List

Europe terror alert might impact Taiwan’s GDP: TIER

BRIGHT SPOT:A slight rebound in the manufacturing sector might be augmented if exports improve over the next two to three months, TIER researcher Gordon Sun said

Staff writer, with CNA

The terror alert in Europe following the Paris attacks could lead to a decrease in private consumption, leading to a decrease in Taiwanese exports to the region and a corresponding slowing of the economy this quarter, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.

Taiwan’s exports to Europe have declined by more than 10 percent annually so far this year, and despite signs of a rebound in the manufacturing sector this quarter, a decrease in exports to Europe would depress the economy overall, TIER Macroeconomic Forecasting Center director Gordon Sun (孫明德) said at a news conference.

Taiwan’s GDP contracted an annual 1.01 percent in the third quarter, its worst performance since the third quarter of 2009, while the nation’s merchandise exports fell 13.86 percent year-on-year in US dollar terms.

Earlier this month, the TIER forecast that GDP would rebound and rise an annual 0.25 percent this quarter, while for the whole of this year it predicted a year-on-year expansion of 0.83 percent.

Citing data released yesterday, Sun said that if exports improve over the next two to three months, the strength of the rebound in the manufacturing sector would become more tangible.

The institute’s manufacturing composite index for last month — based on a survey of Taiwanese manufacturers — rose 1.18 points from a month earlier to 91.19, after a 0.47 point month-on-month drop in September.

In the construction segment of the manufacturing sector, the composite index for last month rose 5.78 points from a month earlier to 86.02, following a month-on-month decline of 0.77 points in September.

Meanwhile, the TIER’s service composite index for last month — an indicator of the confidence of the nation’s service sector — fell 0.45 points from a month earlier to 81.08, but the decline was smaller than the monthly drop of 1.86 points seen in September.


The figures show that it is possible the manufacturing sector hit rock-bottom in the third quarter, so last month’s data indicated an improvement, Sun said.

The effects of falling global crude prices showed signs of fading, so exports are likely to improve and eventually give a boost to the local manufacturing sector in the fourth quarter, he said.

As for the local service sector, Sun said a rebound is likely in the first quarter of next year — traditionally a peak season due to the Lunar New Year holiday — adding that retailers could launch promotional campaigns then to further boost buying interest.

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