The government’s business indicators last month stood at “yellow-blue” for the second consecutive month, indicating that the economy is continuing to recover, although at a slower pace, the National Development Council (NDC) said yesterday.
The overall composite score of business monitoring indicators — which takes the leading and coincident indicators into account — decreased by 1 point from the previous month to 22 last month, the council’s monthly report said.
“We can see from the two major indicators that the nation’s economy has been improving steadily, although the momentum lost some steam last month,” NDC research director Wu Ming-huei (吳明蕙) told a media conference in Taipei.
The index of leading indicators posted its seventh consecutive growth last month, rising from 101.79 a month earlier to 102.14, the report said.
The indices four constituent measures, such as export orders and building permits, showed positive trends, while the indicators for closing stock prices and monetary aggregates M1B declined.
The index of coincident indicators, which gauges monthly economic conditions, also reported its seventh consecutive increase, up from 102.61 the previous month to 102.97 last month, the report said.
The “yellow-blue” reading could be attributed primarily to the decline in Taiwan’s machinery and electric equipment imports, which posted a 5.2 percent annual decrease last month, the council said.
The council uses a five-color spectrum to reflect the nation’s economic health, with “blue” signaling a recession, “green” steady growth and “red” overheating, while “yellow-blue” represents a transition.
Despite the less than satisfactory signal, the council is relatively upbeat about the nation’s short-term economic outlook, given an overall upward trend in Taiwan’s economic cycle.
“Based on past experience, the ‘yellow-blue’ spectrum should be a short-term phenomenon,” Wu said.
That is because domestic demand is expected to be boosted by semiconductor companies’ continuous investments in advanced processing technologies, the council said, referring to Taiwan Semiconductor Manufacturing Co’s (台積電) latest move to build a NT$500 billion (US$17.19 billion) plant in Tainan to make the world’s first 5 nanometer chips.
Taiwan should also benefit from the global economic recovery seen in recent months, the council said, adding that the IMF has lifted its global growth forecasts by 0.2 percentage points to 3.9 percent for both this year and next year.
The council’s optimistic forecast came as the Taiwan Institute of Economic Research (台灣經濟研究院) on Thursday raised its economic growth forecast for the nation this year to 2.34 percent, slightly higher than its estimate of 2.3 percent in November last year.
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