The government’s business climate monitor was “yellow-blue” last month as leading indicators moved up, but coincident series continued to weaken, the National Development Council (NDC) said yesterday.
The reading suggests that the nation’s export-reliant economy is still mired in a global slowdown, with no solution in sight, the council said.
“The escalating US-China trade war is hurting global trade and business confidence, but a solid increase in private investment is easing the blow,” NDC research director Wu Ming-huei (吳明蕙) told a media briefing.
The council uses a five-color system to describe the state of the domestic economy, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition.
The gauge rose one point to 21, aided by better retail, wholesale and dining sales, the council said in a report.
Stock prices rose last month, before turning negative this month, the report said.
The domestic economy has stalled, with the pace of growth coming under intense pressure following a sudden shift in US-China trade ties, as major Taiwanese firms are highly exposed to global electronics supply chains in China, Wu said.
Washington’s threat to extend punitive tariffs to smartphones and laptops might wreak havoc on local firms that supply chips, camera lenses, casings, touch panels and other critical components for global technology brands, analysts have said.
Still, Wu said that she is not completely pessimistic, as some Taiwanese firms could benefit from order transfers.
Scores of companies with operations in China have filed applications to move production lines back home and the government has approved investment projects valued more than NT$310 billion (US$9.86 billion), Wu said.
The figure is bound to rise as trade tensions persist, she said.
Capital repatriation was in part responsible for double-digit growth in capital equipment imports in the first four months of this year and helped spur construction, she said.
The business climate monitor also showed that the leading index series, which seeks to forecast the economic landscape in the next six months, rose 0.85 percent to 102.47 on the back of improved semiconductor equipment imports, the council said.
The coincident index series, which reflects current economic changes, fell 0.62 percent to 97.16, it said.
Among the factors making up the indices, exports, industrial output, employment and others all registered negative cyclical movements, it added.
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