The government’s business monitoring system in January flashed “blue” for the eighth consecutive month, reflecting a continued weakness in the nation’s export-oriented economy, the National Development Council said yesterday.
A “blue” light indicates economic weakness, while “green” suggests stable conditions and a “red” light signifies overheating.
The total score for the council’s Taiwan Business Indicators stood at 14, unchanged from December last year, as economic barometers all registered negative cyclical movements except for the gauge on money supply, the council said.
“The economy might disappoint this year, as it did last year, in light of the extended global slowdown, with China and other emerging markets looking set to soften further,” council Director Wu Ming-huei (吳明蕙) told reporters.
The signal might remain “blue” next month and beyond due to the disruptions to business caused by the Lunar New Year holiday and the Feb. 6 earthquake, Wu said.
The global economic slowdown is hurting exports — which account for more than 60 percent of the nation’s GDP — so export orders and shipments have continued their double-digit percentage slide this year, the council said.
The trend-adjusted leading indicators, which predict economic conditions three to six months ahead, recorded 98.04 in January, a fall of 0.22 percent from December last year, the report said.
Although the pace of the contraction was small, the downturn shows no signs of reversal, the council said.
The council pinned the blame on the poor performance on the TAIEX and soft export orders, which more than subdued positive cyclical movements for semiconductor book-to-bill ratios, building permits and job market accession rates.
As external demand registered a dramatic decline year-on-year, the Directorate-General of Budget, Accounting and Statistics in January cut its forecast for GDP growth for the whole of this year from 2.32 percent to 1.47 percent.
Corporate leaders and economists have voiced concerns over a lack of exciting product developments in the technology sector, and growing competition from China which might weaken Taiwan’s position if companies fail to innovate and upgrade.
The coincident index, which reflects current economic conditions, dipped 0.11 percent to 98.31, the report said.
Five component readings — most notably custom-cleared exports and imports of machinery and electrical equipment — deteriorated in January from the previous month, although electricity consumption and sales of food and trade services picked up, the report said.
On a positive note, local semiconductor and airline companies have increased capital spending, lending support to private investment, the council said.
However, private consumption appears to have decelerated, likely affected by the lackluster economy, the council said.
The situation might improve in the second half when technology giants are scheduled to launch next-generation devices and the high-sales season commences, the council said.
The lagging indicator series weakened 0.68 percent to 98.37 as all six sub-indices logged negative cyclical movements, the report said.
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