The government’s business climate monitor last month flashed “red” for the sixth straight month, signaling a continued economic boom even though the overall score shrank slightly due to a local COVID-19 outbreak, the National Development Council (NDC) said yesterday.
The gauge shed 2 points to 38 and could falter this month as the low-base effect tapers off, NDC research director Wu Ming-huei (吳明蕙) said.
“Regardless, the nation’s economy should stay on a stable course in the foreseeable future, thanks to strong exports, industrial production and private investment, while virus containment measures crimp business for service sectors,” Wu told a news conference in Taipei.
Photo: CNA
The council uses a five-color system to portray the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a transition.
Lackluster retail, wholesale and restaurant revenues accounted for the decline of 2 points, while other indicators held steady, Wu said.
On the trade front, demand for electronics gained momentum as international technology brands are about to release new-generation products to meet back-to-school and holiday demand, the official said.
Taiwan is home to the world’s leading manufacturers of chips and other electronic components used in smartphones, laptops, wearables and vehicles.
Export orders, a critical barometer of actual exports one to three months ahead, last month expanded 21.4 percent year-on-year to US$55.3 billion, boding well for Taiwan’s export-focused economy, the Ministry of Economic Affairs said earlier this week.
The index of leading indicators, which seeks to predict the economic situation in the next six months, softened 0.66 percent to 100.47, as all constituent measures lost points except for the reading on local share prices, the council’s report found.
A local COVID-19 outbreak caused retreats in business confidence, labor accession rates and construction floor areas, Wu said, adding that the situation should improve as the outbreak subsides.
The index of coincident indicators, which reflects the current economic situation, pared 0.89 percent to 101.51, the council said.
Industrial production, sales of manufacturing goods and imports of capital equipment picked up, while non-farm payroll, electricity usage and export value pointed downward, it said.
The government is to help shore up domestic demand by distributing Quintuple Stimulus Vouchers likely in October, Wu said.
That would lend timely support to GDP growth at a time when a favorable base effect for exports wanes, the official said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS