The government’s business climate monitor for last month flashed “red” for a third straight month, indicating a booming economy that has not yet reflected a recent surge in COVID-19 infections in the nation, the National Development Council said yesterday.
The overall score increased by 1 point to 41, the highest since May 1987, thanks to improving customs-cleared exports, although the readings on export orders and new construction floor space retreated slightly, the council said.
“It is too early to gauge the pinch of the outbreak on the economy, as it would depend on how long it persists,” NDC research director Wu Ming-huei (吳明蕙) told an online news conference in Taipei.
Photo: CNA
The council uses a five-color code to depict the nation’s economic picture, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a transition.
The health crisis could erode GDP growth for this year by 0.06 percentage points if authorities could bring it under control next month, Wu said, adding that the damage would deepen to 0.53 percentage points if the outbreak extends into the third quarter.
Wu expects the adverse impact to be limited to businesses reliant on domestic demand, while exporters might continue to benefit from inventory-building demand, as major economies emerge from the pandemic.
The index of leading indicators, which projects the economic scenario in the next six months, slipped 0.02 percent to 104.72, ending 11 months of increases after the sub-indices on export orders and construction floor area registered negative cyclical movements, the council said.
The slippage is small and harmless, as a majority of firms are expecting a business pickup moving forward, he said.
New construction floor area fell mainly due to fewer office building projects, while residential projects continued to increase, Wu said.
The index of coincident indicators, which mirrors the current economic situation, gained 0.77 percent to 106.17, rising for 11 consecutive months, the council said.
The council also said that it would release its business climate figures for this month in July, rather than next month, as the Directorate-General of Budget, Accounting and Statistics said it needed more time to compile unemployment data.
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