Taiwan’s business climate monitor last month flashed “green” for a fourth straight month, indicating steady growth, although the economy lost further momentum, the National Development Council said yesterday.
The total score of the nine constituent readings lost one point, dropping to 27 due to weakening industrial production and money supply data, the council said.
“The pace of slowdown became more evident [last month], but it is premature to interpret the trend as an economic turnaround,” council research director Wu Ming-huei (吳明蕙) said.
The council uses a five-color system to indicate the state of the nation’s economy, with “green” meaning steady growth, “red” suggesting a boom and “blue” signaling a recession. Dual colors indicate a shift to a stronger or weaker state.
International research bodies have in the past month trimmed their forecast for global GDP growth, citing Russia’s invasion of Ukraine, inflation and monetary tightening, Wu said.
Rising energy and commodity costs, as well as other financial burdens, have squeezed consumer spending for nonessential items and caused local manufacturers to become increasingly conservative about their business outlook, she said.
The index of leading indicators, which seeks to predict the economic situation in the coming six months, fell 1.27 percent to 97.26, the council said, as almost all sub-indices posted negative cyclical movements except the reading on semiconductor equipment imports.
The index of coincident indicators, which reflects the current economic situation, lost 0.76 percent to 99.69, as all sub-indices declined from one month earlier, it said.
There is little Taiwan can do to reverse unfavorable external developments, but the government has introduced new stimulus measures to shore up domestic demand and ease inflationary pressures, Wu said.
Against that backdrop, financial markets might become increasingly volatile, but the business climate for service providers might improve soon on a stabilizing COVID-19 situation, she added.
There is a high chance that the climate monitor will continue to flash “green” throughout the second half of this year, she said.
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