The nation’s economy deteriorated last month, with the government’s business monitoring system slipping into the “blue” zone for the second time this year, as firms turned conservative about capital investment, the National Development Council (NDC) said in a report yesterday.
The signal indicated that the pace of the slowdown has accelerated from a “yellow-blue” in May, as major economic bellwethers displayed negative cyclical movements, the report said.
The overall score for the monitoring system lost 2 points to 16 last month, mainly due to lower imports of machinery and electrical equipment from a year earlier, NDC Director Wu Ming-huei (吳明蕙) told a media briefing.
The import trend is used to track private investment interest based on business prospects. The latest data confirmed weakening demand for electronic components from Taiwan, the report showed.
The leading indicator index, a gauge of the economic landscape three to six months earlier, slid 0.31 percent to 98.13 last month, shrinking for the 15th consecutive month, it said.
The coincident index, a reflection of current economic conditions, dropped 0.99 percent to 97.22 last month, from a decline of 0.72 percent in May, the report said.
In addition, manufacturers expressed caution about their business prospects going forward, pulling down the overall score by another point, the report said, despite the advent of the high season for restocking demand, especially for Taiwanese chip manufacturers.
Taiwan is home to the world’s top contract chipmakers and testing and packaging service providers.
To prop up the economy, the Cabinet yesterday approved plans to increase the public construction and technology budgets to help industry get smarter and more digital.
NDC Minister Woody Duh (杜紫軍) said the Directorate-General of Budget, Accounting and Statistics (DGBAS) is reviewing the budget increase and would release detailed figures soon.
The spending plan came after major economic data such as exports, export orders and industrial output contracted for months from their year-earlier levels.
However, the nation’s economic landscape might improve in the second half of the year, given the upward trend in economic barometers in the US and Europe, Wu said.
In addition, the launch of next-generation consumer technology devices later this quarter might spur buying and benefit firms in the supply chains, Wu said, citing Apple Inc’s new handsets as an example.
On the domestic front, back-to-school demand and expanded use of big data and the Internet of Things should drive revenue growth for technology firms, Wu said.
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