Taiwan’s business climate monitor last month displayed “yellow-blue” for the first time in 26 months as an economic slowdown worsened — apparently evolving into a recession with no quick resolution, the National Development Council (NDC) said yesterday.
The overall score plunged 6 points to 17, just one point above a “blue” reading — indicating recession — showing that economic challenges loom, the council said.
The monitor has not had a “yellow-blue” reading since July 2020, it said.
“It is hard to tell whether the monitor would turn blue or improve this month, as many subindices are hovering around the borderline,” NDC research director Wu Ming-huei (吳明蕙) told a news conference in Taipei.
“Things are evidently deteriorating and challenges look massive in the next few months,” Wu 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.
Wu attributed the slowdown to fast inflation, monetary tightening, and geopolitical conflicts wreaking havoc on global financial markets and consumer demand for Taiwan’s exports, mainly electronics used in smartphones, laptops, data centers, vehicles and Internet of Things applications.
Inventory adjustments had proceeded more slowly and would need a lot more time than previously expected, she said.
Major Taiwanese firms gave conservative guidance for this quarter and expect business to weaken further next year, she said.
The index of leading indicators, which indicate the economic situation for the subsequent six months, shrank 0.92 percent to 96.06, as export orders, share prices, new construction floor space and labor accession rates all had negative cyclical movements, the NDC said.
The value of imported semiconductor equipment was the only indicator with a positive development, it said.
It is the 11th consecutive month that the index declined, with a cumulative fall of 7.59 percent, it said.
The index of coincident indicators, which reflects the current economic situation, lost 1.82 percent to 95.01 last month, Wu said, adding that it has contracted for seven months in a row, with its cumulative retreat widening to 8.2 percent.
NDC Minister Kung Ming-hsin (龔明鑫) earlier yesterday told lawmakers that the government is striving to maintain GDP growth of 3.3 percent this year.
The goal looks doable thus far, but would be difficult to achieve next year, Kung said.
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