Fri, Jun 28, 2019 - Page 12 News List

Climate monitor unchanged, but public confidence up

By Crystal Hsu  /  Staff reporter

The government’s business climate monitor posted another sluggish “yellow-blue” signal last month, but the public gained more confidence as firms commit to moving back to Taiwan from China.

The overall monitor shed four points to 17, just one point shy of indicating a recession, as all segments showed negative cyclical movements, except machinery and electrical equipment imports, the National Development Council said yesterday.

“The data reflect the negative effects of US-China trade tensions on Taiwan,” council 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 economy, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition. The monitor system has shown “yellow-blue” for the past five months.

The trade dispute has not prevented local semiconductor firms from expanding capacity or improving their technology leadership on the world stage, allowing for a relatively stable economy, Wu said.

Despite current headwinds, semiconductor firms must have detected business opportunities and increased investment, she added.

Many firms plan to shift production away from China to Taiwan or Southeast Asia, lending support to capital formation and job creation, Wu said.

This explains why the leading index series, which seeks to forecast the economic landscape in the next six months, rose 0.52 percent to 102.42, thanks to improved business confidence, capital equipment imports, export orders and stock prices, she said.

The leading index series gained 2.55 percent in the past five months, the council said.

However, the coincident index series, which reflects current economic changes, fell 0.44 percent to 97.32, with all seven subindices losing value for the 16th consecutive month, it added.

The trade dispute has harmed exports, although some firms would benefit from order transfers, Wu said.

Separately, the consumer confidence index this month increased 0.32 percent to 79.8, even though the subindex on stock market investment weakened to a six-and-a-half-year low, a survey released yesterday by National Central University showed.

The investment gauge lost two points to 58.6, as the volatile local bourse unnerved investors, university research center director Dachrahn Wu (吳大任) said.

Otherwise, the public felt slightly better about the economy, durable goods purchases, household income and consumer prices, encouraged by capital repatriation among firms based in China, Wu said.

More than 100 firms with production in China have applied to move back Taiwan to avoid US tariffs, bringing investments of more than NT$300 billion (US$9.65 billion), government data showed.

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