The nation's business monitoring indicator (景?eth>1齔|信?燈) changed for the first time in three months, from "green" to a "yellow and blue" warning light, the Council of Economic Planning and Development (CEPD, 經濟建3]委-?|) said yesterday.
The color change for the much-watched economic light indicator means the economy may be heading toward a recession and signals a need for the government to make proper policy decisions as a response.
The index that makes up the light signal fell to 20 points in September down from 23 the month before, the CEPD said.
Among the nine indicators that make up the light signal, scores for five remain unchanged, one is up and three are down.
Specifically, on the financial side, the indicator measuring the M1B money supply grew at a rate 15.5 percent, up from 13.9 percent the month before. The increase contributed one point to the the light signal index.
On the production side, the export growth declined from from August's 14.6 percent rate to 1.4 percent in September. The drop shaved two points off the light signal index.
Manufacturing and export orders are closely related to each other. The former's growth rate decreased from 7.7 percent to zero percent in September, which accounted for a one point drop in the index.
The growth rate for export orders decreased from 0.5 percent to negative 5.6 percent, which also accounted for a one point drop in the index.
"In the short-term, the quake has more effect on Taiwan's GDP production than on the financial side," said Hu Chung-ying (
"However, in the long-term, the impact of the earthquake on Taiwan's finance largely depends on the government's fiscal policies and will show its effect no faster than next year."
In addition, the CEPD's set of business cycle indicators(
The leading indicator index, which includes items such as the average hours worked by a manufacturing employee in a month, was 102.7 in September compared to 103.5 the month before, a 0.5 percent drop.
The coincident indicator index, which includes items such as manufacturing profits, was 99.8, which is 3 percent lower than in August and the lowest since September 1996.
However, the CEPD said there was no need to worry about a long-term trend towards recession.
"Exports have increased approximately 23 percent for the first half month of October. It is a good sign of quick recovery," Hu said.
Tsang Yoshing (
"October, November and December are busy seasons for exports, so the most adversely affected exports should return to normal. And, important industries such as electronics were not hurt by the quake as much as traditional industries like agriculture," Tsang said.
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