The government’s business monitoring system last month turned “green” for the first time in 17 months, reflecting a gradual improvement in the economy, the National Development Council (NDC) said yesterday.
The overall composite score of business monitoring indicators — which takes the leading and coincident indicators into account — rose by 3 points from the previous month to 23 last month, according to the council’s monthly report.
The “green” signal could be attributed to the growth in the TAIEX’s average closing price, machinery and electrical equipment imports, and trade and food services revenue, council Deputy Director Chiu Chiu-ying (邱秋瑩) told a news conference.
The council uses a five-color spectrum to categorize the nation’s economic health, with “blue” signaling a 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.
Both leading and coincident indicators have been trending up, the council’s report said.
The index of leading indicators, which is used to gauge the nation’s short-term economic outlook, posted its fifth consecutive growth last month, rising from 99.51 a month ago to 100.14 last month, the council said.
The index of coincident indicators, which is used to gauge monthly economic conditions, also reported its fifth consecutive increase last month, rising from 100.73 the previous month to 101.77 last month.
NDC Deputy Minister Kao Shien-quey (高仙桂) said that she is cautiously optimistic that the business monitoring system would flash “green” again this month, as the government is introducing expansionary fiscal measures this year, while state-run firms are expected to accelerate their investments in the second half.
Domestic demand is expected to be stimulated by semiconductor companies’ investments in advanced processing technologies and the approaching high season for domestic retailers, the council said .
Furthermore, the launch of Apple Inc’s new products is expected to help boost sales of its Taiwanese suppliers, lending support to the nation’s growth momentum in the second half, it said.
Externally, stronger demand for electronics products in the second half should also benefit Taiwanese exports, the council said.
However, the domestic economy remains vulnerable to fluctuations in the global economy, it said, adding that the US Federal Reserve’s plans on interest rates and the rise in global protectionism are key factors that need to be closely watched.
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