The climate gauge for the nation’s manufacturing industry is expected to turn “green” next year from “yellow-blue,” as vaccines could help the world emerge from the COVID-19 pandemic, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said on Wednesday.
Electronics suppliers would continue to benefit from low-contract business opportunities, as it would take a while for most people to be vaccinated, the institute said.
The Taipei-based institute seeks to project the health of the manufacturing sector using a five-color system with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition.
The pandemic has also been weighing on end-market demand for most electronics, with the exception of data centers, PCs and devices used in online services, it said.
Smartphone sales might gain better momentum next year with the launch of faster 5G services, the institute added.
The business climate for all other manufacturing sectors would remain yellow-blue, the institute said.
Renewed lockdowns in Europe would put pressure on the recovery of the automotive aftermarket business by slowing demand for auto parts, it said.
Demand for chemical and plastic products might pick up on the back of a global economic improvement, but increased supply from Chinese peers could create a supply glut, the institute said.
Furniture and textile product makers would gain support from property development and public infrastructure projects, but a strong New Taiwan dollar might erode profitability for petrochemical materials, it said.
Taiwan’s exclusion from the Regional Comprehensive Economic Partnership — signed by 15 Asia-Pacific nations on Nov. 15 — would add uncertainty to the nation’s business outlook, the institute said, adding that metal product makers would face similar challenges.
For the month of October, the manufacturing climate monitor flashed another yellow-blue signal with the index falling 0.85 points from September to 11.03, the institute said.
Fewer working days accounted for the month-on-month retreat, as well as the end of inventory stockpiling by China’s Huawei Technologies Co (華為), a major customer for scores of local technology firms, it said.
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