The government’s business climate monitor showed that the economy floundered in slowdown mode last month as the COVID-19 pandemic continued to weigh on wholesale and retail business, manufacturing-sector sales and corporate sentiment, the National Development Council (NDC) said yesterday.
“The pace of the slowdown in Taiwan is easing, but uncertainty is building abroad due to a surge in global confirmed cases and therefore bleaker outlooks for the world’s economy from international research institutes,” NDC research director Wu Ming-huei (吳明蕙) said, citing the IMF as an example.
Taiwan cannot afford to let its guard down, and must closely watch the pandemic and US-China trade tensions, the two largest downside risks in the second half of the year, Wu said.
The overall monitor shed 1 point from a month earlier to 18, reading “yellow-blue” — which indicates a sluggish economic state — for the third straight month.
The council uses a five-color system to portray the state of the nation’s economy, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a transition.
Of the nine components measured, only the narrow M1B money supply gauge — cash and cash equivalents — as well as industrial production and share closing prices registered positive movements, the council said.
The leading indicator series, which aims to predict the economic scene in the coming six months, shrank 0.77 percent to 97.45, falling for the seventh consecutive month with a cumulative retreat of 5.46 percent, the council said.
The decline is tapering off, meaning the bite of the pandemic is losing steam, Wu said.
Export orders, a gauge of actual exports in the next one to three months, returned to positive territory, due to robust demand for 5G and remote learning and working arrangements, the council said.
Construction floor space, imports of semiconductor equipment and labor accession rates have not improved, it said.
The index of coincident indicators, which reflect the current economic situation, dropped 1.05 percent to 97.63, the council said.
Readings on total electricity utilization, non-farm payroll, as well as food and beverage sales, registered negative cyclical movements, it said.
Coincident indices might improve from this month, as people regained confidence regarding shopping, domestic tours and social gatherings after local infections stabilized, Wu said.
The distribution of stimulus vouchers next month would lend further support to consumer activity, she said.
Already, the just-concluded Dragon Boat Festival holiday weekend saw a solid increase in domestic travel and spending, Wu said.
However, Taiwan cannot stay above a global downturn, she said.
The government is closely monitoring the international situation and would take necessary steps to meet challenges, she added.
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