Taiwan’s business climate monitor last month was green for a second consecutive month, suggesting steady growth, but downside risks are gathering strength amid China’s COVID-19 lockdowns and Russia’s invasion of Ukraine, the National Development Council (NDC) said yesterday.
The total score of the nine subindices lost 3 points to 28, with the values on business confidence, local share prices as well as retail, wholesale and restaurant sales subsiding, while the five other gauges held steady, NDC research director Wu Ming-huei (吳明蕙) said.
Exports, a main growth driver, remained strong with double-digit percentage growth last month, thanks to digital transformations and demand for innovative technology applications, Wu said.
Photo: CNA
The council uses a five-color system to capture the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a shift to a stronger or weaker state.
The war in Ukraine is driving up international energy and commodity prices, which is unfavorable for corporate profitability and consumer spending, Wu said.
Global monetary tightening is rocking financial markets worldwide, while China’s lockdowns of key industrial and commercial cities is negatively affecting supply chains, she said.
Local suppliers of components used in smartphones, laptops and TVs have given conservative guidance for their shipments and selling prices for this quarter, she said.
The index of leading indicators, which is intended to project the economic scene in the following six months, fell 0.33 percent to 100.19, the council said.
Almost all subindices displayed negative cyclical movements, except for the reading on new construction, which posted a gain, it said.
The index of coincident indicators, which reflects the current economic situation, posted a 0.09 percent increase to 102.34 percent on the back of improving exports, non-farm payrolls, and imports of machinery and electrical equipment, it said.
Retail, wholesale and restaurant sales would take a dive this month, as people stay home due to Taiwan’s COVID-19 situation, Wu said.
“That is a worrying development,” she added.
The government has rolled out fresh subsidy and relief funds to help affected companies and individuals.
Meanwhile, the consumer confidence index this month lost 3.96 points to 67.81, dragged down by a volatile local stock market, rising retail prices and economic uncertainty, a survey by National Central University showed.
All six subindices fell, although people remained somewhat positive about purchases of durable goods, mainly real estate, the survey said.
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