Manufacturing climate gauge falls: TIER

By Lisa Wang  /  Staff reporter

Thu, Dec 26, 2013 - Page 13

The business climate gauge for the nation’s manufacturing sector fell for the third straight month last month as a result of tepid demand from Asian markets, according to a survey released by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday.

The manufacturing sector’s gauge dropped 0.34 points to 95.86 last month from October’s 96.2, indicating that the sector would be in the doldrums before likely rebounding in the second quarter next year, the survey showed.

The survey indicated that 34.5 percent of respondents, including apparel makers and LCD panel makers, were bearish about their business outlook last month. In October, the figure stood at 26.8 percent.

“As Asia is the main export destination for many local manufacturers, feeble economies such as China, Japan and Southeastern Asian countries have a negative impact on Taiwan’s exports,” TIER president David Hong (洪德生) told a media briefing.

“The petrochemical, steel and precision machinery [mainly for LCD panel manufacturing] industries are likely to bear the brunt,” Hong said.

About two-thirds of products made by local manufacturers are exported to Asia, TIER said.

The nation’s exports are likely to hit bottom next quarter due to seasonal factors, Hong said.

As the local economy remains weak, the central bank is unlikely to raise its key interest rates any time soon, said Gordon Sun (孫明德), director of the institute’s macroeconomic forecasting center.

To boost GDP, TIER said the government should prop up private consumption and make it the second pillar of the nation’s economy. That means the government needs to make a greater effort to help increase wages and boost employment, Sun said.

The government could do this by rewarding companies willing to increase salaries and hiring, Sun said.

For instance, the government could consider subsidizing companies who raise monthly wages by a rate higher than consumer price, he said.

“That would help pass on economic growth to the general public, otherwise GDP is just a figure that does not link to people’s daily lives,” Sun said.

Over the past 13 years, the nation’s GDP grew 4 percent annually on average, but labor wages stalled 15 years ago, he said.