Tue, Jan 29, 2013 - Page 1 News List

CEPD says economic indicators flashed green signal

By Camaron Kao  /  Staff reporter

The Council for Economic Planning and Development (CEPD) said yesterday its composite monitoring economic indicators flashed a “green” signal for the first time last month in 16 months, indicating the nation’s economic conditions have improved to “steady growth” from “slowdown” in November last year.

The council uses a five-color spectrum to gauge domestic economic health, with “blue” signaling recession; “yellow-blue” a slowdown; “green” steady growth; “yellow-red” a slight overheating; and “red” overheating.

The score of composite monitoring indicators — which take into account both leading and coincident indicators — reached 23 last month, up two points from November, because of higher export figures and a slower decline in imports of machinery and electrical equipment last month, the council said in a report.

Year-on-year export growth last month was 3.6 percent, up from minus-1 percent a month ago, while the year-on-year decline of imports of machinery and electrical equipment last month was 2.1 percent, compared with 7.3 percent in November, the report showed.

The index of leading economic indicators, which is used to gauge short-term economic outlook, edged up 1.2 percent last month from a month earlier to 134.7 points, the council’s monthly report showed.

The index’s annualized six-month rate of change, which provides a more accurate forecast of the business cycle in the near term, climbed 0.9 percentage points to 6.8 percent last month from a month ago, marking the fifth month of consecutive improvement, the report said.

However, the index of coincident indicators, which reflects monthly economic conditions, declined 0.4 percent to 97.3 points last month, its seventh consecutive decline.

“The index was dragged down by decreasing electric power consumption, one of the coincident indicators, which implies local companies are still adjusting to the rise of electricity rates implemented last year,” Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, told a press conference.

“We are cautiously optimistic about the near future, but we also acknowledge that uncertainty remains widespread,” Hung said, adding that the “fiscal cliff” problem in the US remains unsolved, Europe’s economy is still in decline and the depreciation of the yen poses a new risk to global trade.

“Japan and Taiwan are different in that 17.6 percent of Taiwan’s imports are from Japan, while Taiwan’s exports to Japan only account for 6.3 percent of total exports,” Hung said.

However, Hung said that as the yen becomes cheaper, more foreign companies would place orders with Japanese companies instead of Taiwanese companies, the number of Japanese tourists in Taiwan would possibly decline and Japanese businesses would be less willing to invest in Taiwan.

Commenting on the report, former council chairman Chen Pao-chih (陳博志) said that the economy was still not yet recovering sufficiently.

“For 5 percent economic growth to be seen, exports should grow as high as 7 percent to 8 percent year-on-year for at least two months, and imports of machinery and electrical equipment should be 5 to 6 percent,” Chen said.

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