The nation’s industrial output last month shrank 20.5 percent from a year earlier, driving the index down to 109.02, the worst since March 2021, due to weak demand and fewer working days, the Ministry of Economic Affairs said yesterday.
The economic barometer has contracted for the past five months and could soften further by 7.8 percent to 11.2 percent this month, given that the global economy remains frail and unfavorable for exports, Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said.
Huang said it is better to combine the industrial production data of the past two months to eliminate the holiday effect and gain a better understanding of actual cyclical changes.
The industrial output index is expected to decline by 15.1 to 16.7 percent for last month and this month, not as disappointing as had been projected, Huang said.
Taiwan’s industrial production is closely tied to the showings of export orders and actual outbound shipments, the main growth driver.
The latest industrial production data show that Taiwan is experiencing a technical recession, or two consecutive quarters of negative growth in real GDP.
The nation’s export-focused economy is forecast to shrink 1.2 percent this quarter after contracting 0.41 percent last quarter, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Wednesday.
Output readings among manufacturing sectors, which weigh on the economy more than 90 percent, tumbled 21.38 percent, while mining production retreated 17.62 percent, and electricity and gas output dropped 6.95 percent, DGBAS said.
Manufacturers have cut production and capacity, while cautiously managing inventory, to save on operating costs amid a slow season, Huang said.
Inventory corrections extended to local chipmakers, terminating 38 consecutive months of output growth, Huang said, adding that other electronics suppliers have been taking a hit for several months.
Flat panel production plunged to a 14-year low of 61.82, representing a 55.9 percent decrease from a year earlier, he said.
Output for computers and related products fell 12.2 percent, but demand for servers and network equipment held firm, Huang said.
Non-tech products were similarly weak with a 26.7 percent retreat in chemical product output and a 21.7 percent decline in base metal products, DGBAS said.
Machinery equipment vendors reported a 30.5 percent reduction in output, as economic uncertainty dampened purchasing interest among corporate customers, it said.
Looking ahead, firms with flat views account for 63.8 percent for this month, with 19 percent expecting a business decline and 17.1 percent anticipating a pickup, DGBAS said.
That suggests a further decline in the industrial output index, although at a milder pace, Huang said.
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