Taiwan’s business climate monitor last month signaled green for a third consecutive month, indicating steady growth, after global inflation and China’s COVID-19 controls had weighed on earlier readings, the National Development Council said yesterday.
The total score of nine constituent readings held steady at 28.
However, challenges loom ahead for exports, which have fared well so far, council research director Wu Ming-huei (吳明蕙) said.
Photo courtesy of the National Development Council
The council uses a five-color system to depict 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.
Exports account for 60 to 70 percent of the nation’s GDP, as Taiwan is home to the world’s largest suppliers of chips used in smartphones, laptops, autos, and high-performance computing and Internet of Things applications.
Critical economic barometers such as exports, industrial production and export orders have shown signs of a slowdown, but remain in expansion territory, Wu said.
China’s virus controls have disrupted supply chain flows while the Ukraine war has been pushing up international energy and raw material prices — incidents over which Taiwanese firms do not have any control, he said.
Rising inflationary pressures worldwide have taken a toll on global demand for smartphones, laptops, TVs and vehicles.
Domestic demand, on the other hand, might soon come out of the woods, as local semiconductor companies press ahead with capacity expansion plans, which would shore up private investment, Wu said.
The government’s travel subsidies are to take effect next month, by which time the number of locally transmitted COVID-19 cases is expected to have fallen significantly, allowing business activity to recover, he said.
The index of leading indicators, which seeks to project the economic scene in the coming six months, fell 0.7 percent to 99.03, the council said, as almost all sub-indices fell, with the exception of the reading on new construction floor spaces.
The index of coincident indicators, which reflects the current economic situation, shrank 0.56 percent to 100.64, dragged by almost all components except for the gauge on exports, it said.
The gauge on retail sales last month rose from a year earlier, because the government did not tighten social distancing measures this year, as it seeks to live with COVID-19, similar to other countries, Wu said.
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