The government’s business climate monitor turned “red” for December last year, suggesting an economic boom after a three-month hiatus, attributable to strong demand for electronics used in developing artificial intelligence (AI), the National Development Council (NDC) said yesterday.
The composite score rose 4 points from November last year to 38, helped by the high sales season for technology products and frontloading demand ahead of the Lunar New Year holiday, NDC Economic Department Director Chiu Chiu-ying (邱秋瑩) told a media briefing, adding that pickups in the industrial output, manufacturing sales and business confidence readings contributed to the gain.
The council uses a five-color system to depict the nation’s economic state, with “red” indicating a boom, “green” suggesting steady growth and “blue” signaling a recession. Dual colors of “yellow-red” and “yellow-blue” indicate that the economy is changing gears.
Photo: CNA
Taiwan is home to the world’s major suppliers of AI chips, servers, memory, storage and other electronic components.
Domestically, retailers and restaurants reported resilient business in line with Lunar New Year celebrations, the council said.
The index of leading indicators, which seeks to project the economic scenes in the subsequent six months, shrank 0.76 percent to 100.43, with most components — including stock prices, new construction floor space, exports outlook and money supply — losing momentum, the council said.
The readings for labor accession and imports of semiconductor equipment displayed positive cyclical movements, it added.
AI-related sectors might be overheating, warranting careful monitoring, Chiu said, adding that US President Donald Trump’s trade policy is adding to the uncertainty.
Trump has threatened to impose tariffs on semiconductors, which would be unfavorable for Taiwan’s chipmakers.
The index of coincident indicators increased 0.61 percent to 105.2 thanks to favorable cyclical movements in industrial production, imports of capital equipment, exports and overtime hours, the council said.
The advances more than offset retreats in the measures of electricity usage, as well as wholesale, retail and restaurant revenues, it said.
The council said it is confident that Taiwan’s economy would grow by more than 3 percent this year, on top of a 4.3 percent increase last year.
Chiu declined to comment on whether the “red” signal would continue, saying that “red” and “yellow-red” signals both indicate economic health.
Global trade is to rise this year, while major US technology giants have reaffirmed commitment to AI investments, a trend that would benefit local firms on the AI supply chain, she said.
Furthermore, companies at home and abroad would step up spending on low carbon migration, which would help boost private investment, she added.
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