Tue, Jan 29, 2019 - Page 12 News List

Business monitor shows recession alert

STIMULUS RESPONSE:The NDC minister said that the US-China trade dispute was unfavorable for exports, but added that government subsidies would offset declines

By Crystal Hsu  /  Staff reporter

National Development Council Minister Chen Mei-ling speaks at a news conference in Taipei yesterday after the council’s business climate gauge flashed “blue” for last month.

Photo: Lee Ya-wen, Taipei Times

The government’s business-climate monitor last month flashed “blue,” the first recession alert since April 2016, as a slowdown in exports and industrial output spread to sales at trade and food service operators, the National Development Council (NDC) said yesterday.

“The US and China have not found solutions to their trade differences, which is unfavorable for exports,” NDC Minister Chen Mei-ling (陳美伶) said.

The government is seeking to shore up private investment and consumer spending while the trade dispute evolves, Chen said.

The council uses a five-color system to describe the state of the economy, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual-color signs indicate a transition.

The retreat is not limited to Taiwan, but is a global phenomenon, dampening sales of semiconductors, smartphones and other technology devices, Chen said.

Taiwan is home to the world’s largest contract chipmakers and chip designers, as well as manufacturers of camera lenses, casings, touch panels and other components used in mobile gadgets and Internet of Things applications.

The business climate weakened from 17 to 16, while the reading for sales of trade and food services also took a hit, the council said.

There is no need to be overly pessimistic, as the government has introduced stimulus measures, mainly subsidies for domestic travel and purchases of home appliances, Chen said.

In addition, the government has taken steps to welcome firms based in China to move manufacturing facilities back to Taiwan, she said.

The leading index series, which predicts the economic picture for the subsequent six months, shed 0.9 percent to 99.49, the council’s report showed.

Data on export orders, closing stock prices, corporate confidence and floor space in new construction showed negative cyclical movements, the report said.

The coincident index series, which reflects current economic changes, was 98.45, down 0.62 percent from a month earlier due to weaker electricity consumption, manufacturing shipments, non-farm payrolls and other readings, it said.

In related developments, the consumer confidence index for this month rebounded to 83.63, a National Central University survey showed.

The data were an improvement of 3.89 points from last month after the local stock market showed signs of stabilization along with global markets, the survey said.

The sub-index on stock investment picked up 19.3 points to 93.8 as investors regained confidence, it said.

The TAIEX gained 43.72 points, or 0.44 percent, to 10,013.33 yesterday.

The benchmark index has risen 2.94 percent so far this year, Taiwan Stock Exchange data showed.

Other constituent readings for consumer sentiment also indicated positive movements, with the exception of the gauge on the job market, the university’s survey showed.

On Jan. 22, the Directorate-General of Budget, Accounting and Statistics reported that last month the unemployment rate was 3.66 percent, down 0.04 percentage points from a month earlier, with the rate for the whole of last year down 0.05 percentage points to 3.71 percent, an 18-year low.

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