The government’s business climate monitor last month remained “red” for the ninth month in a row, indicating a flourishing economy buoyed by strong outbound shipments and recovering private consumption as the effects of a COVID-19 alert faded, the National Development Council (NDC) said yesterday.
The overall score rose 1 point to 39 as Taiwan’s tech firms benefited from demand for chips used in 5G telecommunication, high-performance computing and new technology applications, the council said.
Companies rebuilt inventory in non-technology sectors as countries reopened, it said.
The ongoing boom is the longest since the launch of the climate gauge 38 years ago, NDC Research Director Wu Ming-huei (吳明蕙) said, adding that the situation is likely to continue for the rest of this year.
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.
Spiking oil and commodity prices are driving up costs for firms, but a strong local currency helps buffer some imported inflation pressure, Wu said.
The index of leading indicators, which seeks to predict the economic situation in the subsequent six months, increased 0.88 percent to 103.79, as employment, new construction floor space, export orders and semiconductor equipment imports picked up, the council said.
However, business sentiment among manufacturers and stock prices declined, it said.
The index of coincident indicators, which mirrors the current economic scene, gained 0.44 percent to 102.76, thanks to rises in electricity use, wholesale and restaurant revenue and non-farm payrolls, Wu said.
It would be difficult for the coincident index to climb higher without contributions from domestic demand, given that exports and industrial production have been expanding for a long time, she said.
Although the private consumption reading rose, there is a lot of room for improvement, she said, adding that COVID-19 variants are the biggest downside risk to a global economic recovery.
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