The government’s business climate monitor last month stood at “yellow-blue” for the second consecutive month, indicating that the economy has started to recover, but the pace is slow, the National Development Council (NDC) said yesterday.
The council’s Taiwan Business Indicators increased by three points to 20 last month, spurred by improving industrial production, capital equipment imports and manufacturing sales data, the council’s monthly report said.
However, the council did not interpret the increase as the beginning of recovery on concerns that Britain’s decision on Thursday last week to leave the EU, or Brexit, might wreak havoc on global financial markets and sales of consumer electronics.
“More evidence is needed to decide if the improvement is solid and stable,” NDC Director Wu Ming-huei (吳明蕙) told a news conference, adding that the marginal size of the pickup lends support to caution.
The “yellow-blue” signal suggests the economy is moving away from a recession it has been mired in for the past three quarters, caused by a global economic slowdown and China’s economic rebalancing.
Exports, which account for 70 percent of GDP growth, remain in negative territory although industrial output ended its decline last month, Wu said, attributing the mixed data to uneven recovery.
Semiconductor manufacturing firms fared better than companies operating in other sectors, highlighting the pickup in capital equipment imports and industrial production, Wu said.
The upcoming launches of Apple Inc’s iPhone 7 series and other products are widely believed to be the catalyst for the increase, he said.
The leading indicator index, which is used to gauge near-term economic outlook, increased 0.03 percent last month, ending 20 months of declines, the report said.
“The increase is insignificant and might dip again as the impact of Brexit unfolds,” Wu said.
Brexit might lead to the breakup of the EU, which accounts for 10 percent of Taiwanese exports, she added.
The concurrent index series, which reflects apparent economic conditions, increased 0.28 percent to 99.22, rising for the third month in a row, the report said.
However, Wu said that the pace of increase is too small to be dependable.
A “green” light, which suggests stable economic growth, is a more reliable indicator of recovery, Taiwan Research Institute (台灣綜合研究院) researcher Lee Chun-shan (李俊杉) said, adding that the signal remains a long distance away.
The stock price index, in particular, is sensitive to global headwinds and might drag the overall score this month and beyond, although it helped elevate the leading indicator gauge last month, the NDC said.
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