The nation’s business climate monitor last month again signaled a slowdown as private investments continued to gain momentum, but downside risks linked to a trade dispute between the US and China intensified, the National Development Council said yesterday.
The monitor signaled yellow-blue for the seventh consecutive month with a score of 21, unchanged from June, indicating that the economy remains soft, despite the advent of the high season for technology products, the council said.
“There are encouraging signs, but they are not strong enough to lift the monitor to ‘green,’ which suggests a stable economy,” 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 domestic economy, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition.
Positive turns mainly precede releases of next-generation smartphones, notebook computers and other consumer electronic products that boost business for local firms in their supply chains, Wu said.
Pledges by China-based Taiwanese firms to move their production back home would lend support to capital formation and the job market, she said.
In addition, the government is to start construction on several infrastructure improvement projects, Wu said.
About NT$110 million (US$3.5 million) of investment pledges would be realized this year, the Directorate-General of Budget, Accounting and Statistics forecast earlier this month.
The leading index series, which seeks to predict the economic picture for the next six months, rose 0.1 percent to 102.01 to post its seventh monthly increase, thanks to positive cyclical movements in stock prices, export orders, money supply and corporate confidence, the council said.
The gauges on semiconductor equipment imports, construction floor area and net employment registered declines, it said.
POSITIVE READINGS
The coincident index series, which reflects current economic conditions, increased 0.33 percent for the third straight month to 99.21 on the back of positive readings for exports, industrial output, wholesale, retail and restaurant revenues, it said.
Electricity usage, non-farm employment and machinery imports posted negative cyclical values, it said.
The US-China trade dispute, which intensified over the weekend, presents the largest downside risk to recovery, as firms could lose investment interest or postpone expansion plans until there is better visibility, Wu said.
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