The manufacturing sector last month remained weak with its recovery uncertain amid the global resurgence of COVID-19, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The composite index for the local manufacturing sector edged up 0.09 points from a month earlier to 10.09, showing “blue,” which indicates a contraction, for the fourth consecutive month, the institute said.
However, the index also rose for the second consecutive month, pointing to a gradual rebound in domestic manufacturing, on expectations that economic reopenings would boost foreign demand.
The institute uses a five-color system to describe economic activity, with “red” suggesting overheating, “yellow-red” showing fast growth, “green” representing stable growth, “yellow-blue” signaling sluggish growth and “blue” reflecting a contraction.
Out of the five factors that make up the manufacturing composite index, the sub-indices for general business climate and demand moved up 0.22 and 0.17 points from a month earlier respectively, while the sub-indices for pricing, raw materials and operating costs moved down 0.17, 0.12 and 0.01 points respectively, the institute said.
In terms of industries, the chemical raw material industry remained “blue,” but the electronic components industry benefited from emerging technologies such as 5G, high-performance computing applications and artificial intelligence applications, leading the sector to “green,” it said.
However, resurgences in reported COVID-19 cases worldwide since late last month could affect the tentative global economic recovery, the institute said.
In contrast to uncertainty in the wider world, Taiwan has successfully contained the COVID-19 pandemic, it said.
In addition, government policies to attract overseas businesses to invest, increased investment in semiconductor production equipment and the introduction of economic stimulus programs are expected to boost the nation’s economic growth in the second half of this year, the institute said.
In such a situation, the index gauging the manufacturing sector is expected to move higher and show “yellow-blue,” it added.
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