The government’s business climate monitor last month flashed “yellow-red” light for the first time in two years, as strong industrial production, increasing imports of machinery equipment, robust domestic commercial activities and stock investments boosted the momentum of local businesses, the National Development Council said yesterday.
Prior to last month, the business climate monitor had maintained a “green” signal for three consecutive months.
The council measures the nation’s economic situation using a five-color system, with “blue” signaling a recession, “green” suggesting steady growth and “red” indicating a boom. “Yellow-red” reflects a slight boom, while “yellow-blue” shows sluggishness.
Photo: CNA
The total score of the monitor’s composite index rose four points from the previous month to 35, indicating steady growth for six months in a row, the council said in a report.
Meanwhile, the index of leading indicators, which gauges the economy’s direction in the next six months, moved up by 0.5 percent month-on-month to 102.09, rising for the seventh consecutive month, it said.
The index of coincident indicators, which tracks the current pace of economic activity, climbed 0.93 percent to 102.82, increasing for the 13th consecutive month, the council said.
“Benefiting from the growing demand for artificial intelligence and other tech applications, indicators such as industrial production, machinery and electrical equipment imports have turned to flashing red. Coupled with continued advancement in the leading and coincident indicators, the domestic economy is steadily recovering,” the council said.
Of the composite index’s nine components, the subindices on imports of capital equipment and sales of retail, wholesale and food and beverage services increased by two points each and changed from “green” the previous month to “red,” the report said.
The subindex on industrial production rose by one point, going from “yellow-red” a month earlier to “red,” while the subindex on manufacturing sales increased by one point, changing from “green” to “yellow-red, it said.
However, customs-cleared exports decreased by two points and flashed “green,” compared with “red” a month prior, the report said.
There were no changes in the signals of the other four subindices, including money supply, the TAIEX, non-agricultural employment and sentiment of the manufacturing sector, the report said.
Looking ahead, the council expects exports to continue showing steady growth, on the recovery of global trade and growing opportunities linked to emerging applications related to artificial intelligence.
It also said it expects domestic investment to continue gathering steam thanks to demand for advanced technologies, digital transformation and net zero carbon emissions, in addition to government projects for public works.
Meanwhile, private consumption is expected to retain strong momentum on the back of stable employment, higher minimum wages, a vibrant stock market and more government subsidies for housing and education, it said.
“However, uncertainties such as potential interest rate cuts in major economies, continued geopolitical risks and the intensifying rivalry between the US and China still exist, and their future developments deserve close observation,” the council said.
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