The government’s business climate monitor last month signaled “blue,” indicating a recession, as the global economic slowdown weighed on Taiwan’s manufacturing, foreign trade and financial activity, the National Development Council said yesterday.
The score for the monitor gained 1 point to 11, remaining in recessionary territory for five straight months and with little chance of recovery in the short term, council research official Wu Ming-huei (吳明蕙) said.
“Global inflationary pressures have shown signs of stabilization, but remain at high levels,” Wu said, adding that systemic financial risks have mitigated, but financial markets are still volatile.
The backdrop is unfavorable for Taiwan’s exports, mainly electronics used in smartphones, personal computers, wearable devices, televisions and automobiles, the official said.
The council uses a five-color system to portray the nation’s economic health, with “green” signifying steady growth, “red” suggesting a boom and “blue” reflecting a recession. Dual colors suggest a transition to a stronger or weaker state.
The economy is hitting a bottom and could start to heal in the next quarter, council Minister Kung Ming-hsin (龔明鑫) said earlier yesterday.
Corporate sentiment has picked up despite poor order visibility beyond this quarter, Wu said, attributing the improved sentiment to an expected pause in monetary tightening by the US Federal Reserve.
The leading index series, which aims to project economic scenarios one to six months in advance, grew 0.66 percent to 100.7, due to positive readings in new construction floor spaces, stock closing prices and business confidence, the council said.
However, the indices on imports of semiconductor equipment, money supply and labor accession rates declined, it said.
Business orders would improve in emerging industries next quarter, and inventories would gradually return to healthy levels, Wu said, adding that more evidence is needed to speculate on a concrete recovery.
The index of coincident indicators, which reflect the current economic situation, shed 1.75 percent to 89.99, the council said.
Industrial production, exports, as well as imports of electrical equipment and other components displayed negative cyclical movements, it showed.
The reading on non-farm payroll was the only exception with a moderate advance, the council said.
The government’s policy for neutral carbon emissions would encourage companies to develop renewable energy and related facilities, lending support to private investment, Wu said.
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