The government’s business climate monitor signaled “yellow-red” for a second straight month in January, as strong demand for electronic and non-technology products ramped up business at local suppliers, the National Development Council said yesterday.
The gauge gained three points to 37, the highest in a decade, NDC research director Wu Ming-huei (吳明蕙) said, adding that the reading is only 1 point away from “overheating,” which might happen later this quarter in light of improving economic barometers.
“The demand and production fronts are gathering momentum across tech and non-tech sectors, as the economic landscape brightens at home and abroad,” Wu said.
Photo: CNA
The council uses a five-color system to portray the nation’s economic picture, with “green” indicating steady growth, “red” suggesting overheating and “blue” signaling a recession. Dual colors indicate a transition toward a recession or a boom.
Wu said that the gauge might in the next few months turn “red,” as the Directorate-General of Budget, Accounting and Statistics last month projected double-digit percentage increases for exports through the first half of this year, partly due to a low base last year.
Wu said that the “yellow-red” signal was due to frontloading demand ahead of the Lunar New Year holiday, when most Taiwanese companies took one week off.
That explained why exports and imports of electronics and machinery equipment were upgraded from “green” to “yellow-red,” the council said.
Meanwhile, revenue measures for wholesale, retail and restaurant operators turned from “yellow-red” to “red,” it said.
The positive trend is to continue as COVID-19 vaccines are more widely available, Wu said.
However, the public health crisis remains the biggest uncertainty, he added.
The index of leading indicators, which predicts the economic situation for the following six months, grew 0.78 percent to 107.07, as almost all subindices registered positive cyclical movements except the index on new construction floor space, the council said.
The US government is planning a new stimulus package of US$1.9 trillion that would help people and firms in the US affected by the pandemic and facilitate the country’s economic recovery, Wu said, adding that Taiwanese exports would likely benefit from that.
The index of coincident indicators, which reflects the current economic state, grew 1.07 percent to 105.5, as all of its seven measures increased, the council said.
Local tech firms would continue to benefit from ongoing global shortages of electronic and vehicle parts, Wu said.
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